Filecoin (FIL) Reaches Seven-Month Low, Prepping for a Comeback

4 months ago 45

Filecoin (FIL) has seen its price slide from $6.13 to $4.35 in less than seven days. As of this writing, the altcoin trades at $4.46 after an initial drop to the lowest value since December 1, 2023.

Bears breached the $5 support on June 15, but FIL appears to have hit a local bottom. Here’s what on-chain and technical analysis tells about the price.

Demand Wanes, But Things Are Improving

BeInCrypto findings show that Filecoin sank because of the lingering pessimism and a lack of demand for the cryptocurrency. We found evidence after analyzing the state of the Weighted Sentiment.

Weighted Sentiment is an improved version of the social volume. Spikes in the metric occur when the social volume is high and mentions of the asset are positive on average. Conversely, dips occur when most of the comments online are negative.

On June 7, Filecoin’s Weighted Sentiment jumped to 5.54. Around that period, the price traded at $6.13. However, over the last few days, the reading has been dropping. At press time, the sentiment reading stands at -0.48.

Typically, negative sentiment around a cryptocurrency means demand for the coin may be low. This is because market participants will be making cautious moves as the broader perception is that the token in question— FIL, may not make a major upswing in the short term.

However, Filecoin’s social dominance rose to 0.11% at the time of writing. Built on top of social data, Social Dominance measures discussion about a cryptocurrency in the media compared to other assets in the top 100 per market cap.

As the chart below shows, a rise in this metric foreshadows a price increase. When it falls, it leads to a decline. Therefore, FIL is in the process of recovering from its recent lows, provided that Social Dominance remains elevated.

FIL Price Prediction: $4.94 Looks Feasible

Looking at FIL from a technical perspective, indicators align with the potential bullish prediction. On the daily chart, bulls are defending the $4.35 region and using it as support to prevent a further decline.

If the defense remains solid, FIL may move toward $4.04, the upper resistance. Further, the Tom DeMark (TD) Sequential validates this outlook. The TD Sequential shows the end of a trend and helps to identify the start of a new one.

The chart below shows that sellers are exhausted, and buyers have capitalized on the fatigue. Should this trend continue, the price of FIL may climb to $4.94, as initially stated. If validated, this prediction will become a reality within the next one to five days.

Furthermore, the Relative Strength Index (RSI) indicates that FIL is oversold. The RSI is an oscillator that uses recent price changes to measure momentum. When the reading is above 70, an asset is overbought. But a reading at 30 or below means it is oversold.

At press time, the FIL/USD daily chart shows that the RSI is 30.39, meaning that the token was oversold and reverses to the upside. Should this upward momentum continue, FIL’s price will trade higher.