Can Filecoin finally end years of underperformance, or is another decline still ahead? The answer matters because the token is sitting at a crucial technical level after losing nearly all of its value from its peak.
Filecoin Tests Key Support Against Bitcoin
FIL/BTC weekly, according to Vuori Trading, is close to a key level, having been stuck in a bearish channel for about five years. Filecoin, since 2021, has been underperforming Bitcoin as indicated by the lower high and lower low formations.
However, recently, FIL/BTC has managed to maintain its levels at the bottom of the channel, which acts as a strong support level.
If Filecoin re-enters the channel and trades above the middle trend line, there is a good chance of the price rising to reach the 0.236 Fibonacci level, which could be three times the price level of Bitcoin.
Source: X
In the case where the price goes even higher and reaches the 0.618 Fibonacci level, the price could be as high as six times that of Bitcoin. The RSI on the weekly chart is now stable after having been oversold.
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Long-Term Downtrend Still Dominates FIL Price
While the Bitcoin comparison hints at a possible reversal, Crypto Patel pointed to Filecoin’s much weaker long-term performance against the US dollar.
FIL has declined by around 99.72% since its peak in 2021, which was close to the $230 mark. The asset managed to break below an important ascending trendline but then failed to reverse the fall, which allowed for the determination of the level of resistance.
Source: X
Filecoin is currently trading at historically low levels, so its potential rally will be faced with some resistance.
AI Growth Puts Focus on Filecoin’s Storage Network
According to Tiger Research, decentralized storage solutions like Filecoin and Arweave might prove beneficial in the future with increasing AI applications, as they offer a viable option to large cloud operators.
This technology allows users to share excess storage capacity and thus offers better data ownership rights and reduced dependency on large cloud companies.
However, according to the report, decentralized storage solutions lack any technical edge over the existing technologies; hence, investors are looking at the crucial levels for Filecoin.
Will Filecoin’s Next Move Confirm a Recovery?
Whether Filecoin will be successful or not next time will depend upon whether it manages to hold above its long-term support against Bitcoin and break the critical resistance levels in the FIL/BTC and FIL/USDT pairs.
In case of breakout confirmation, Filecoin will have a chance to lift sentiment and create grounds for its recovery. Otherwise, the coin is expected to remain under pressure.
This article contains market analysis and price predictions. These are not guarantees. Crypto markets are volatile. Always DYOR. Not financial advice.
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