The crypto market crash of last week has affected every token present in the worst possible way. With plummeting prices and a slow road to recovery, most tokens are still struggling to reach their road to recovery. Filecoin’s native cryptocurrency FIL is no different.
The token registered significant sideways action in the last four days. This is despite a comeback by crypto bulls during the weekend, leading to a significant upside for most of the top cryptocurrencies. FIL’s performance was lacking, if we consider gains by top coins, despite which it remains one of the most promising cryptocurrencies. However, we have to look back at the latest market events in order to understand why FIL is so promising.
UST’s crash highlighted some of the risks associated with cryptocurrency investments. The event has further forced investors to minimize their risk exposure, and a cryptocurrency’s utility is a key determinant. Filecoin’s decentralized file storage model provides an actual service that has multiple perks. For example, it offers data immutability and secure storage in a safe and decentralized manner.
The Filecoin model provides real-world utility while solving problems associated with centralized data storage. FIL is tied to the Filecoin ecosystem and this means that it will likely benefit from long-term growth. However, FIL’s current performance is heavily correlated to Bitcoin.
FIL: The hen with the golden egg?
FIL traded at $8.62 at the time of writing, a notable gain from 12 May’s low at $6.71. It is down by roughly 68% from its end-of-March top. It is also a long way off from its $430 historic high. This means it is heavily discounted and due for a significant recovery.
The latest bear market pushed FIL into oversold territory according to the RSI. It has also been struggling to get out of the oversold zone since then and its MFI highlighted a lack of adequate inflows to support a healthy bullish recovery. Furthermore, the MFI suggested that FIL bears are losing their momentum, and this explains the sideways action in the last four days.
Furthermore, FIL’s on-chain metrics signaled some recovery after the heavy selloff in the last two weeks. For example, the DYDX exchange funding rate metric registered a normalizing interest in the derivatives market. Whales have been selling during the bearish conditions but the supply held by whales registered a slight uptick in the last 24 hours.
Although metrics reflect the tapering out selling pressure, thus, highlighting the lack of adequate bullish momentum for recovery. Despite this, the Filecoin protocol has been growing at a healthy pace. It recently achieved a three-month high even as the market registered a significant downturn.
The Filecoin blockchain also happens to be one of the most efficient blockchains in terms of energy usage and transparency. This speaks of its commitment to long-term growth and a sustainable future.
If the project maintains the same commitment, then Filecoin might be one of the most promising crypto projects. This might be enough to push FIL to its previous highs and potentially beyond, hence it is very attractive at its current price.