- Retail investors are growing euphoric about Filecoin after a recent announcement.
- FIL has risen nearly 70% in the past three days, reaching new yearly highs.
- Despite the upward price action, on-chain and technical metrics suggest a pullback is coming.
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Filecoin has stolen the crypto spotlight after its native token, FIL, rose to new yearly highs. Still, different metrics suggest that this cryptocurrency is poised to retrace before continuing its uptrend.
Filecoin’s Popularity Explodes After Chainlink Integration
The decentralized storage network Filecoin captured the market’s attention after integrating the oracle service Chainlink.
According to Colin Evran, ecosystem lead Protocol Labs, the merger will help automate storage functions and connect FIL’s network with other smart contract blockchains.
Developers will be able to compute operations off-chain with a complete Web 3.0 infrastructure.
FIL’s price appreciated nearly 67% following the announcement, outperforming some of the top cryptocurrencies by market capitalization. It went from a low of $82.60 to reach a new yearly high of $137.80.
Alongside prices, data from Santiment reveals that the number of FIL-related mentions on different social media networks also skyrocketed. Since Mar. 24, this altcoin’s social volume surged by a whopping 2,600%.
The rising chatter around Filecoin allowed it to move to the number two spot on Santiment’s Emerging Trends list.
Filecoin’s recent popularity is not necessarily a good sign for its short-term price action.
When prices pump, and the crowd pays increased attention, a steep correction tends to follow. Every cryptocurrency that claims one of the top three positions on this list regularly falls by roughly 8% shortly after.
Therefore, increased crowd attention can be considered a leading indicator of price slumps.
A Steep Decline Before Further Gains
The Momentum Reversal Indicator (MRI) indicator adds credence to the bearish outlook. This technical index currently presents an orange arrow on FIL’s 12-hour chart, warning that the uptrend is about to reach exhaustion.
A spike in profit-taking around the current price levels may help validate the bearish formation, leading to a one to four 12-hour candlesticks correction before the uptrend resumes.
A downswing that sends Filecoin below the $124 support level will help confirm the bearish scenario. Under such circumstances, FIL may drop towards the 61.8% or 50% Fibonacci retracement level.
These crucial areas of support sit at $113 and $105, respectively.
Given the momentum that Filecoin has seen lately, the optimistic outlook cannot be taken out of the question. A bullish impulse that pushes FIL above the recent high of $137.80 may have the strength to allow prices to advance further.
If this were to happen, investors must watch out for an upswing towards the 127.2% Fibonacci retracement level at $155.40.
Disclosure: At the time of writing, this author owned Bitcoin and Ethereum.
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