Derivatives data and recent protocol developments signal that retail traders have turned bullish on FIL.
Filecoin (FIL) accumulated 65% gains over the past 30 days to reach its highest price since June 8. The recent strength was accelerated after an Aug.6 partnership with Chainlink’s oracle protocol on Aug. 6 allowed the projects to join their grant initiatives to speed up the development of hybrid smart contracts to leverage code running on the blockchain while the managing data computation process off-chain.
Numerous events triggered the $235 all-time-high on April 1, but that movement is clearly long gone because the cryptocurrency is 67% below that level. Let’s take a moment to understand what triggered the rally and whether these drivers still exist.
China-based mining activity boosted investors’ expectations
Filecoin is a decentralized cloud-based data storage network that allows its users to gain rewards for selling their excess storage on an open-source platform. The built-in economic incentives ensure files are reliably stored over time.
The network’s storage capacity surpassed 2.5 exabytes in February, which lead to positive remarks from influencers like Cameron Winklevoss, the billionaire investor and co-founder of the Gemini exchange.
— Cameron Winklevoss (@cameron) March 17, 2021
On March 17, Grayscale Investments, the digital currency asset manager behind the GBTC Trust, announced the launch of its Filecoin investment vehicle.
On March 25, a $23 million Filecoin Ecosystem Fund was announced, backed by large Chinese investment groups like Fenbushi Capital, SNZ Capital, and Neo’s EcoFund.
New smart contract capabilities are expected and FIL’s daily issuance was cut
On March 31, Qtum founder Patrick Dai said that the protocol was working to enable smart contracts for Filecoin through the Qtum network.
On April 10, Martin Gaspar, a research analyst at CrossTower exchange, told Cointelegraph that solid demand from Chinese miners emerged due to a shortage of proof-of-work rigs. Gaspar added that these miners “are required to pledge the FIL token as collateral, resulting in demand for the token.”
Lastly, on April 15, Filecoin changed its supply economics, reducing its daily issuing from 648,000 FIL per day to 365,000. The drastic cut likely led to a perception of scarcity for the token. In turn, it may have caused retail investors and miners to accelerate their investments ahead of the event.
Data shows retail activity has been picking up
Perpetual futures contracts, also known as inverse swaps, have an embedded rate usually charged every eight hours to ensure no exchange risk imbalances.
Whales, arbitrage desks, and market makers avoid exposure to these instruments due to their variable funding rates. When longs (buyers) demand more leverage, they are the ones paying the fee. The opposite holds when shorts (sellers) use more leverage, thus causing a negative funding rate.
The above data clearly shows the funding rate surging between Aug. 10 and Aug. 17, and it reached a positive 0.08% average. This number translates to 1.7% per week, indicating increased leverage longs activity. After receding for a couple of days, the indicator initiated another hike to a 0.10% fee charged every 8-hour from longs.
The current 2.1% weekly equivalent fee indicates even stronger leverage from retail traders, which means optimism. Of course, there’s no way to know if the recent move will be enough to spark a continuous price improvement, but traders seem to believe $100 is closer than ever.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.
Retail investors are flocking to buy Filecoin on exchanges with predominately Chinese user bases and the head of the PBOC thinks the digital yuan has an uphill battle to take on Alipay and WeChat Pay.
Distributed storage network project Filecoin is the talk of the town as FIL was the most highly traded token on Huobi, OKEx and Gate on Thursday. These three exchanges have a predominantly Chinese user base and represent a large part of the Tier One trading volume for major pairs. On Thursday afternoon, Huobi trading volumes of FIL were more than three times that of BTC as the price reached a 7-day increase of 170%.
Filecoin has had strong success in capturing the attention of Chinese investors, including large investment groups such as Fenbushi Capital, SNZ Capital and Neo’s EcoFund. These three were part of a group that backed the $23 million Filecoin Ecosystem Fund, announced on March 25. The Filecoin Ecosystem Fund is intended to support projects and help development on the network. It could also give backers early access to new projects, which is a lucrative model for VCs in an increasingly crowded investment space. It remains to be seen which of these two consequences are a bigger priority for the funds involved.
On March 28, OKEx produced a video explaining the concepts behind Filecoin, which received around 600 shares and 3400 likes on Weibo. This shows a high level of attention from the Chinese retail audience, a demographic that is tough to obtain and hard to preserve over longer time-frames.
NFTs in Beijing, Polkadot in Hangzhou
Beijing-based BlockCreateArt hosted a major NFT art exhibition on March 26 supported by auction house Christie’s, Digital Finance Group and mining rig producer Bitmain. Interest in digital art has increased on some levels in China, but cultural and artistic differences have led to a more pragmatic approach towards leading digital artists such as Beeple. The exhibition will be stopping in Shanghai early in April.
Hangzhou was home to the Open Days blockchain exhibition sponsored by Candaq Fintech Group. The event had one hall dedicated to Polkadot projects, with speakers from Rarelink, Litenty and Phala, among others. The upcoming parachain auctions have become a topic of interest with so many local projects and projects with ties to the region being built on Polkadot.
Central bank head says digital yuan playing catch-up
The head of the Digital Currency Research Institute at the People’s Bank of China has recognized that private payment processors Alipay and WeChat Pay are in a dominant position in the Chinese payment space. During a panel appearance, Wang Changchun noted that the government-backed digital currency would be needed to maintain stability should something happen to the existing solutions. For the moment, WeChat Pay and Alipay don’t seem to be in any imminent danger of losing their market share, but that could change quickly if government-led incentives were put in place for those willing to convert.
In enterprise news, electric vehicles brand IM Motors, working with SAIC Motor and Alibaba, announced a blockchain powered service network that would incentivize customers to share data with the company. In order to achieve some level of traceability and resistance to tampering, on-chain points would be given to customers using the vehicle and related apps.
The blockchain network was announced as exclusive and private, so while it represents a slight normalization of blockchain technology, it will likely have much in common with more centralized storage networks.
This weekly roundup of news from Mainland China, Taiwan, and Hong Kong attempts to curate the industry’s most important news, including influential projects, changes in the regulatory landscape, and enterprise blockchain integrations.
Anchorage and Tokensoft have launched wFIL, a wrapping protocol allowing Filecoin to be used on Ethereum.
Cryptocurrency infrastructure providers Anchorage and Tokensoft are teaming up to wrap FIL, the native token of decentralized file storage network FIlecoin, for use on Ethereum.
“Wrapped Filecoin will enable some really creative DeFi products that create huge opportunities for Filecoin miners and storage users.”
The news came on the same day that Filecoin announced the storage capacity dedicated by its global mining community has exceeded one exbibyte — equal to more than one billion gigabytes.
According to an announcement, Filecoin’s capacity could store 4,500 Wikipedias, 290 million movies at 1080p quality, and 19 copies of the entire Internet Archive.
Filecoin is a trustless decentralized storage network that offers incentives to miners who provide storage capacity in the network. The network expects to attract developers and websites who will pay FIL in exchange for accessing Filecoin’s storage or for hosted data.
Filecoin’s Discover feature allows its miners to select datasets spanning literature, science, art, and history to mobilize unused storage capabilities to host and make accessible to the public. The datasets include Berkeley’s Self-Driving Data, a copy of Wikipedia’s database, and The International Genome Sample Resource’s 1000 Genomes Project.
The team describes the milestone as “solidifying FIlecoin’s position as a legitimate challenger to cloud-storage giants such as AWS [Amazon Web Services], Google Cloud, and Dropbox.” Colin Evra stated:
“Our aim was to build a Library of Alexandria for humanity’s most precious knowledge — one that could never be burned […] Filecoin’s mission to create a decentralized, efficient, and robust foundation for humanity’s information is now a reality.“
On Nov. 24, Filecoin also announced it had partnered with top crypto exchange Huobi to launch the Huobi-Filecoin Incubation Center. The center, which will be supported by a $10 million fund, will focus on blockchain incubation, investment, and community development.
Filecoin currently comprises more than 670 active miners and boasts more than 90 organizations building on its network.
Juan Benet, a founder at Filecoin, is attacking Justin Sun for spreading completely false accusations about the movement of the FIL tokens soon after listing. In his long Twitter rebuff, Benet accuses Sun of spreading lies with the intention of harming the Filecoin project financially. Calling the accusations ridiculous, Benet says no one from the […]