Filecoin, the latest crypto to soar in the market rebound

Key points to remember

  • Filecoin has rallied over the past week. That’s up 19.4% on the day.
  • The surge comes on the back of a shift in sentiment in the crypto market despite rising macro tensions.
  • Traders remain divided on whether the market bottom has been reached.

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Filecoin’s FIL is up 19.4% today.

Filecoin jumps on the market rally

Filecoin outperforms the rest of the cryptocurrency market.

FIL/USD (Source: CoinGecko)

The decentralized storage network’s FIL token jumped 19.4% today, outpacing most major crypto assets like Bitcoin and Ethereum. Several other tokens, including Polkadot’s DOT and Kusama’s KSM, also rallied, although Filecoin is today the top performer in the top 100 crypto rankings. According to data from CoinGecko, it is currently trading at $9.90, up 75% over the past week.

The rise comes during a volatile time in the crypto market. Prices have trended lower for months amid macroeconomic stress, market exhaustion and the collapse of giants like Terra and Three Arrows Capital, but the market has started to show signs of recovery in July. Last week, the Federal Reserve raised interest rates another 75 basis points, while the Bureau of Economic Analysis revealed that the US economy had contracted for a second consecutive quarter, signaling the start of a a “technical recession”. While such developments would generally be viewed as negative for risk assets, the crypto market surged higher in the past week, suggesting that the market may in fact have priced in macro uncertainty.

The crypto market rebounds

Bitcoin closed July in the green after a brutal May and June, posting its best monthly performance since October 2021. Meanwhile, Ethereum has taken the market lead in recent weeks amid growing anticipation for its milestone event. “Merge”, tentatively scheduled to go live in mid-September. When Bitcoin and Ethereum rise, liquidity tends to flow into other crypto assets with lower market caps, which is part of what has allowed Filecoin to rally as confidence returns.

Interestingly, some of the best performers have been those related to Ethereum’s so-called “merger trade”. Ethereum Classic’s ETC, for example, has jumped 44.4% over the past week, likely because the narrative surrounding its proof-of-work consensus mechanism has grown stronger (the Ethereum fork will continue to use proof-of-work after its more famous sibling turns on Proof-of-Stake), leading to soon-redundant Ethereum miners flooding into the network. LDO, the governance token of liquid staking protocol Lido, is up 31.3% over the same period.

With many crypto assets showing bullish strength, some market participants have raised questions as to whether “the bottom,” a term crypto enthusiasts use to refer to the lowest price in the bear cycle, might be present. but traders remain divided. While some of the top Crypto Twitter traders claim the bottom is there, others say they are bearish due to the macro environment and the nature of previous bear markets (if Bitcoin and the rest of the market rallied for the rest of the year, the recent slump would be the shortest bear market in the crypto history).

The global cryptocurrency market capitalization is currently around $1.1 trillion, around 63.3% lower than its November 2021 peak.

Disclosure: At the time of writing this article, the author of this article owned ETH and several other cryptocurrencies.

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