Filecoin (FIL) is one of many altcoins that are likely to continue their correction due to bearish market sentiment. Let’s figure out why this happened. Investors are losing ground in terms of both interest in the asset and the influx of funds into it. This could be a key driver for the price drop.
Filecoin is losing supporters
The price of Filecoin has fallen from the $10 region at the beginning of the month to a market value of $5.9 today. This sharp correction seems to have spooked investors a lot given the huge losses they have incurred over the past few days.
According to derivatives market data, open interest (OI) fell by more than 50% in just four days. This is the total number of currently outstanding contracts for various derivatives such as options and futures . The indicator reflects the activity of market participants and liquidity.
The drop in OI from $371 million to $186 million shows that investors exited half of their positions, and they likely retreated due to volatility. These are mainly long traders.
This is evident from the liquidation chart, which shows that approximately $31 million worth of long positions have been liquidated over the past four days. Accordingly, this indicates the capitulation of bullish traders who expected the price to rise.
Multi-month low is expected in FIL forecast
A fall in Filecoin below the $5.6 support level could push the altcoin down to a low of $4.6. The price last tested this level as a bottom in December 2023, marking a four-month low.
However, a bounce from $5.6 will see FIL break through the $6.3 level and turn it into support. This will help cancel the bearish scenario and ultimately trigger a rise in the coin to $7.
About Filecoin
Filecoin is a decentralized system for data exchange and cloud storage. Developed by Protocol Labs, a research and development company that specializes in Web 3.0 solutions. Filecoin is a blockchain based on IPFS (Interplanetary File System). FIL is the network’s native cryptocurrency, serving as a payment instrument connecting buyers and sellers in the IPFS ecosystem.
FIL is a payment facility for storage on the Filecoin Network . When a miner starts lotus-devnet (opens a new local node via the Lotus wallet), the node balance gets 500,000 FIL to run on the testnet. In the future, he receives payment in this cryptocurrency for the hard drive space he provides. FIL can be used to make transactions with other members of the Filecoin network.
