Key Takeaways:
- Filecoin (FIL) halted after a 110% weekly rally.
- The digital asset faces reversal, based on declining trading volumes and overbought RSI
- What factors propelled FIL?
YEREVAN (CoinChaptercom) – Filecoin (FIL) price has pulled off a 110% bull run since July 26, outrunning Bitcoin and Ethereum by a long shot. The crypto peaked at $11 on Aug. 1 before correcting toward $10. However, the sudden surge could prove short-lived, given technical and on-chain headwinds.
FIL bearish factors
In detail, FIL price traded in a sideways consolidation channel since mid-June.
The consolidation channel entailed the price action fluctuating between two horizontal parallel trendlines. Its move could have taken FIL price another leg down after breaking the support. But, the move proved to be an accumulation period, leading the Filecoin price upward.
However, FIL’s trading volumes on the daily chart have subsided, hinting at a looming reversal.
Reversal ahead for Filecoin price
In detail, the declining trading volumes show lower upside expectations from traders. They prefer to secure profits rather than bet on FIL. Additionally, the relative strength index (RSI) charted through ‘overbought’ territory, with the oscillator jumping over 83.
The more detailed four-hour chart confirmed the sell-off fears, showing that a reversal has already begun as of the London session opening bell.
Also read: Bitcoin price hits $24K — time to 'BUY BTC?'
Meanwhile, regardless of the future FIL price vector, the factors that propelled the Filecoin rally are noteworthy.
Why Filecoin surged
Holon Global Investments, a crypto venture capital firm, announced three new investment funds on July 28, including a Filecoin fund.
The Holon Filecoin Fund is understood to be the first retail, managed fund in Australia invested in a crypto asset other than bitcoin and ethereum[…]. Each will charge a management fee of 0.40% a year, or 40 basis points – 67% less than the 1.25% fee charged by the first batch of crypto ETFs in Australia
spacified the announcement.
Also read: Bitcoin struggling to close above $24k, but indicators remain optimistic.
Filecoin price got another push on July 29 from its NFT-Storage, a service that harnesses the platform’s technology to store nonfungible tokens. The service crossed the 30,000 user line and, according to Filecoin, is the “recommended way to safeguard digital assets and metadata.”
It’s unclear whether the listed factors were the main propellers behind FIL’s surge or if it was a nonsense rally. However, the bullish move will likely be short-lived and reverse in the upcoming sessions, based on lowering trading volumes and ‘overbought’ fears.
