Celsius Tops Up More Collateral to Avoid Loan Liquidation, Faces ETH Squeeze

cryptonews.com:

The troubled crypto lending and borrowing company Celsius (CEL), which on Monday halted withdrawals due to “extreme market conditions,” is adding more collateral for a loan on the MakerDAO (MKR) decentralized finance (DeFi) protocol to avoid liquidation. At the same time, the company is facing a growing problem with ETH tokens it has staked on Ethereum 2.0.

The addition of more collateral to the on-chain position has become an urgent necessity for the company, as the falling bitcoin (BTC) price means that more and more coins are needed to prevent the protocol from liquidating the loan.

MakerDAO lends out the stablecoin DAI to borrowers in exchange for collateral worth at least 150%. The 150% collateralization ratio must be maintained at all times to avoid liquidation.

The efforts to keep the loan afloat have attracted the attention of many in the crypto community, given that everything can be viewed in real-time in an on-chain vault.

At 10:51 UTC, the vault shows that Celsius’ loan currently has a collateralization ratio of 195.93%, with a bitcoin liquidation price of USD 16,852.58.

Still, the problem with such a public liquidation price is a known phenomenon in markets where the price tends to fall until major liquidation levels are reached. According to some, this is caused by institutions and ‘whales’ that are “hunting” for major liquidation levels.

“Firms will actively try to push price down to get these big positions liquidated, then make money on the trade when the forced liquidation goes through,” warned Jack Niewold, a popular crypto Twitter user and founder of the Crypto Pragmatist newsletter.

A similar take was also expressed by others, with one popular community member and author, Nik Patel, suggesting that the