Filecoin's price has been falling in recent days as investors questioned the cryptocurrency's utility and risky assets came under pressure from hawkish central banks. The price has already fallen more than 98% from historic highs. Filecoin has gained in the past thanks to the growing belief that blockchain technology will change the way data is stored:
- Filecoin is a major blockchain platform that seeks to compete with the cloud market of dominant platforms provided by Amazon, Microsoft and Google by enabling decentralized data storage. Instead of relying on huge, centralized storage servers located globally, Filecoin allows anyone with free storage to sell their free bandwidth. Anyone with a smartphone, laptop or home data server can provide storage to the network and receive FIL cryptocurrency. Other projects aiming to revolutionize the cloud industry include Storj, Arweave and Siacoin. All of them have been experiencing dynamic declines recently:
Almost $5.7 million of FIL's long positions were liquidated on December 16. Source: Coinglass
- On the demand side, there are concerns about whether people and companies still have the demand for a new decentralized storage platform in view of the fact that the cloud business of Amazon, Microsoft and Google, are doing very well. Traders may question the usefulness of decentralized data storage protocols with huge and growing capacity because there is still not enough demand to use it optimally;
- According to Filecoin, its storage platform has 17.6 million terabytes of capacity. It is unclear how much of this data is used by customers. One company that uses Filecoin's cryptocurrency is OpenSea, an NFT giant built on the Ethereum blockchain. It would likely take a sharp increase in demand for NFT tokens to renew the network's usefulness. On OpenSea, monthly trading volume has fallen to $159 million from about $4.8 billion at the beginning of the year, a drop of about 97% and almost perfectly reflecting the scale of Filecoin's decline from $236 to just $3 today.
Filecoin, M15 interval. Source: xStation5
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