What is Filecoin and Why Its Uptrend is Overshooting Even Bitcoin? | Bitcoinist.com
An altcoin called Filecoin has just escalated its ranks after logging a gravity-defying price rally that beats even its top rival Bitcoin’s uptrend.
The ticker FIL climbed four days in a row — by up to 79.07 percent — against the US dollar to reach its five-month high of $224.16 (data from Binance). Meanwhile, the token closed its first quarter at a 682.32 percent profit, beating Bitcoin and even the US stock market in terms of quarterly gains.
What are Filecoin and FIL?
In retrospect, Filecoin is a decentralized data storage network. The platform allows users to sell their excess digital space on an open platform. It enables its community to use FIL to participate and transact in the Filecoin network. In particular, users can pay mining fees in FIL to store or share data and retrieve their information.
Storage providers also use FIL as collateral to provide a minimum guarantee threshold to their services. As usual, the deal falls through should the FIL collateral decline below the decided level. Filecoin has attracted investments from prominent Bitcoin evangelists, including Civic CEO Vinny Lingham and Meltem Demirors, chief strategy officer at Coinshares.
Economically, FIL comes with a limited supply cap of 2 billion tokens. 600 million of those now stay in the wallets of Protocol Labs (with 6-year linear vesting) and its team members and investors (again, with a 6-month to 6-year linear vesting). About 2.5 percent of the total 600 million FIL fund Filecoin’s future fundraising or ecosystem development.
Meanwhile, the rest of the FIL supply belongs to Filecoin miners, dispatched as rewards for offering their services on the network over time. That gives FIL an underlying utility and, in turn, value.
Institutional Boom
New York-based investment company Grayscale Investments launched a Filecoin trust, through which it expects to purchase FIL tokens and offers institutional investors the FIL-backed shares. Two weeks after its introduction, the trust attracted interest from mainstream investors, with ByBt.com data showing that “the Grayscale Filecoin Trust” added 45,550 FIL to its reserves.
Traders picked up on the FIL accumulation spree. They raised their FIL bids on the day that also saw Bitcoin prices stabilizing and the rest of the top crypto brass logging attractive profits. However, FIL took the cake for being the best performer, rising by almost 40 percent on a 24-hour adjusted timeframe.
The upswing also coincided with the news of The9. The Shanghai-based online game operator signed a $2 million Filecoin mining machine contract. It also agreed on a hosting agreement with a Filecoin mining service provider.
But the real question remains: could the FIL/USD exchange rate rise any further? Technically, the bias favors bears.
FIL’s relative strength indicator on a daily chart shows it as an excessively overvalued asset. That means the token could undergo a bearish correction in the coming session on de-risking sentiment. A sell-off could crash FIL to its previous support target near $123.
Nevertheless, with fundamentals favoring a bullish outlook, FIL could find intermediate support. Unfortunately, the token started trading in October 2020, so there is no historical data to find ideal pullback levels.
Cover Photo provided by Jungwoo Hong on Unsplash.
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