Celestia price outlook: Here’s why TIA risks further losses

• Celestia (TIA) trades at $1.81, down 13% in the past week.
• The altcoin is paring gains seen following a bounce from lows of $1.32.
• Celestia Foundation has announced it bought all remaining TIA from Polychain Capital.

Celestia’s price of $1.81 today  is down double digits in the past week. While it has bounced 38% since hitting its all-time lows of $1.32 in June, it is 70% down in the past year and -91% from its all-time high above $20.9 reached in February 2024.

As the cryptocurrency market navigates its latest pullback, is TIA at risk of fresh losses? Or could Celestia Foundation’s latest move catalyze a fresh recovery?

Celestia Foundation buys back TIA from Polychain Capital

As TIA price fell over the past year, most analysts pointed the finger towards the aggressive dumping by Polychain Capital.

Celestia moved from being one of the most attractive coins at its mainnet launch, to lagging the market. Underperformance in the past year has pushed it further off its peak.

An analyst on X called it one of the “most predatory VC tokens out there.”

The Celestia Foundation has moved to flip the picture, announcing it acquired Polychain Capital’s remaining TIA holdings. It is a move that concludes a long-standing partnership with the VC that acquired coins under or at $1.

Now after dumping tokens, Polychain has agreed to sell its 43,451,616.09 TIA tokens back to the Celestia Foundation for $62.5 million. Polychain is set to undelegate its staked assets to facilitate the deal.

Why is TIA largely bearish?

Despite the Celestia Foundation’s move, TIA’s price trajectory remains largely bearish.

Token unlocks, which will gradually release the redistributed tokens into circulation, remains. This controlled release has the design of a strategy eyeing no sudden supply surge. New investors receiving the coins must therefore not adopt a sell-off strategy similar to Polychain Capital’s earlier actions.

Otherwise, with a potentially aggressive divestment feature and rewards loophole, bears may yet take further hold.

Recently, commenting on TIA price, crypto analyst zeroknowledge posted on X:

“The structural selling pressure is not a side effect, it’s literally the primary feature of the tokenomics design.”

Explaining further, the analyst added:

“The most damning example is Polychain Capital, which invested approximately $20 million across Series A and B rounds. Through the staking rewards loophole (see screenshot below), Polychain already sold over $82 million worth of TIA (achieving a 4x return on investment) before a single one of their primary tokens has unlocked.”

Is this changing? Market participants have pointed to Celestia restructuring its tokenomics and governance model.

As Chaos Labs notes in the above post, Celestia will not just reallocate the Polychain stash, but has a proposal to cut inflation rate. But will this stem the selling?

Celestia price technical outlook

The token traded around $1.81 at the time of writing, with open interest down to $197 million.

Technical indicators -the RSI and MACD on the daily chart give sellers the upper hand. Notably, the RSI is downsloping below 50 while the MACD is signaling a bearish crossover.