Filecoin price popped to the highest level since December 16 despite the rising risks of its utility. It rose to a high of $3.31, which was much higher than the year-to-date low of $2.3. Other storage tokens like Siacoin and Storj also rebounded.
Filecoin utility challenges
Filecoin is the biggest storage blockchain platform in the world. Like other storage platforms, its use case is relatively simple to grasp. Unlike centralized storage platforms like Google Cloud and Microsoft Azure, it uses decentralize storage platforms.
Anyone with a computer, smartphone, or data center can provide storage in its platform and then earn a reward when people use it. This data is safely stored in their network in a highly encrypted format.
The benefit of using a decentralized platform is that it is highly scalable. For a person in Nairobi, they will access their data from a storage provider in the city. Similarly, for a person in Washington, they will store and access their data from someone in the city.
According to its data explorer, there are 3,920 active miners in the network who provide 19.069 EiB in its platform. This is a significant number that is more than 21.9 million terabytes.
Still, Filecoin faces several important challenges. First, the network is competing with well-established brands like Microsoft and Google. These centralized platforms work well and have a long track record of safety.
Second, it is clear that it has a significantly big capacity that is hard to use. One of its biggest use cases is in the storage of Non-Fungible Tokens (NFT) through its partnership with OpenSea. Recently, however, the volume of NFTs traded per month has dropped sharply. Therefore, without a clear use case, it will take a miracle for Filecoin to become a successful platform.
Filecoin price prediction
The daily chart shows that the FIL price made a strong bullish breakout on Tuesday as investors bought the token’s dip. It moved slightly above the 25-day and 50-day moving averages while the Relative Strength Index (RSI) moved to the overbought level. It has also formed what looks like an inverted head and shoulders pattern.
Therefore, despite the H&S pattern, Filecoin will likely resume the bearish trend as fundamentals disappoint. A move above the resistance at $3.50 will invalidate the bearish view.
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