CELO momentum weakens as Coinbase declines support for Celo’s migration to L2

(Originally posted on : Invezz )

Layer 1 blockchain Celo (CELO) will migrate to layer 2 on 16 January 2025.

The move, which has been ongoing for over a year, signals the increasing interest in L2 solutions to fight efficiency and scalability issues.

Meanwhile, Coinbase’s latest announcement to clients ahead of the transition has triggered conversations within the cryptocurrency community.

The leading crypto exchange confirmed that it will not support the migration.

The trading platform urged clients to cash out their Celo L1 coins by 13 January 2025 “to prevent funds becoming inaccessible.” 

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The Celo L1 blockchain (Coinbase ticker: CGLD) is migrating to Celo L2 on January 16, 2025.
Coinbase will not support the migration. Due to migration by hard fork, customers must withdraw CGLD from Coinbase by January 13, 2025 to prevent funds becoming inaccessible.
🧵 ⬇️

8:01 PM · Nov 27, 2024

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The Celo L1 platform will halt block production during the hard fork upgrade, rendering customer funds inaccessible.

While Coinbase indicated that clients could transfer CGLD coins to CELO-compatible addresses, the lack of support for the upgrade has attracted criticism.

Crypto community’s reaction

The crypto community appeared dissatisfied with Coinbase’s decision.

Verda Ventures’ General Partner Alex Witt stressed the exchange’s inconsistency approach.

He highlighted that Coinbase’s Base network and Celo L2 leverage Optimism technology.

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Replying to @CoinbaseAssets

@Celo L2 and @base both use @Optimism, why not support @Celo?
The optics of the situation are that @coinbase is using monopolistic centralized power to king make @base in a supposedly decentralized world.
@coinbase is an outstanding company with a mission “to increase economic…

10:42 PM · Nov 27, 2024

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Witt added that the decision signals monopoly, where the trading firm capitalized on its centralized powers to support Base over other blockchains.

Celo co-founder Marek Olszewski trusts Coinbase’s decision limits the broad Ethereum-centered vision of using L2 solutions to enhance scaling.

He added that resistance from leading exchanges could force other EVM-compatible L1 to hesitate to make similar transitions.

Coinbase’s response to critics

Meanwhile, the exchange stepped up to debunk assertions that it doesn’t support other platforms and Ethereum scalability.

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Replying to @CoinbaseAssets

Any accusation that Coinbase does not support the scalability of Ethereum is not true. Coinbase is focused on being a bridge to the cryptoeconomy and we are in support of L1s and L2s.

5:55 PM · Nov 28, 2024

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Coinbase emphasized its focus “on being a bridge to the cryptoeconomy.” 

While not supporting the technical transition, Coinbase confirmed that it will analyze Celo Layer2 upon its completion and decide about its listing.

Celo’s L2 transition

The Celo team proposed migrating to an L2 platform on Ethereum in July last year, 2023.

Meanwhile, the decision to leverage Optimism’s stack gained approval (after months-long evaluations).

The community remained furious about Coinbase’s 11th-hour announcement, yet Celo’s transition plans have been around for over 12 months.

L2 and Ethereum bull Patrick McCorry believes there’s no reason to interact with the Superchain if it does not support migration.

CELO price outlook

The altcoin traded at $0.8178 after a 1.30% daily increase.

Despite the bullish momentum after rallying 15% the previous week, declining trading volume signals emerging weakness.

CELO’s 24-hour trading volume has declined by 22% to $85.80 million at press time.

That demonstrates faded trader activity, possibly due to Coinbase’s latest announcement.

Nevertheless, the RSI reveals room for more surges before the forecasted dip.

Also, Celo’s performance will likely mirror broad market sentiments in the coming sessions.

Continued bull runs would invalidate the bearish prospects and catalyze more upswings.

The robust community support behind CELO will likely keep prices afloat until the much-awaited altcoin season.

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