15:16 December 20, 2022
The price of filecoin fell over the past few days as investors questioned the usefulness of cryptocurrency and risky assets came under pressure from hawkish central banks. The price has already fallen over 98% from its all-time highs. Filecoin has historically gained traction thanks to the growing belief that blockchain technology will change the way data is stored:
Filecoin is a major blockchain platform that aims to compete with the cloud market of dominant platforms Amazon, Microsoft, and Google by enabling decentralized storage of data. Rather than relying on huge centralized storage servers around the world, Filecoin allows anyone with free storage space to sell their free bandwidth. Anyone with a smartphone, laptop, or home data server can allocate storage space to the network and receive FIL cryptos in return. Other projects aiming to revolutionize the cloud industry are Storj, Arweave and Siacoin. All have seen a dynamic decline recently:
Nearly $5.7 million of FIL’s long positions were liquidated on December 16. Source: Coinglass
On the demand side, one wonders if individuals and businesses still need a new decentralized storage platform given that the cloud businesses of Amazon, Microsoft, and Google are doing very well. Merchants might question the usefulness of decentralized data storage protocols with huge and growing capacity as there is not yet enough demand to make optimal use of them.
According to Filecoin, the storage platform has a capacity of 17.6 million terabytes. It is unclear how much of this data is used by customers. One company using the Filecoin cryptocurrency is OpenSea, an NFT giant built on the Ethereum blockchain. It would likely take a surge in demand for NFT tokens to renew the utility of the network. At OpenSea, monthly trading volume fell to $159 million from around $4.8 billion at the start of the year. This represents a drop of around 97% and almost perfectly reflects the extent of Filecoin’s decline from $236 to just $3 today.
Filecoin on the M15 chart. Source: xStation5 by XTB
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