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Yesterday, after years of waiting, Filecoin (FIL) finally launched, Funded by legendary venture capital companies like Sequoia Capital, Andreessen Horowitz, and Union Square Ventures, the project is a blockchain-based data storage and data recovery network. Users can pay FIL to store their files on secure storage miners, which facilitate the network.

The project, like many other hyped-up coins, launched at absurd valuations. The cryptocurrency quickly spiked above $100 on the exchanges that supported it, meaning it had a fully-diluted market capitalization in excess of $200 billion — yes $200 billion.

Filecoin has begun to crash as investors have realized that it may be overvalued on a long-term basis. Short positions have been opened en-masse, driving the coin dramatically lower on futures exchanges such as Binance and FTX.

Related Reading: Here’s Why Ethereum’s DeFi Market May Be Near A Bottom

Filecoin Crashes on Top Exchanges

Filecoin has crashed dramatically since trading began yesterday on top exchanges such as Kraken, FTX, Binance, and many other exchanges. The coin is down 35% in the past 24 hours as per CoinGecko, but down over 75% from its all-time highs set during the FOMO period yesterday. 

Chart of FIL's price action over the past day. Source: FILUSD from (Kraken data)

It appears that Binance is catalyzing much of the selling pressure.

Analysts have noted that Filecoin futures on the exchange are being shorted en-masse because the funding rate limit of -0.75% per eight hours has been reached. This means that investors can short the asset at a relatively low cost relative to other exchanges, where the funding rate cap may be even lower. This mass shorting is thus driving the cryptocurrency lower.

It’s worth noting that there is a short squeeze taking place. FIL futures on Binance have jumped around 30% since the daily lows, with shorts finally getting squeezed out of their positions.

Related Reading: Tyler Winklevoss: A “Tsunami” of Capital Is Coming For Bitcoin

Where Will the Bottom Be?

While a short squeeze is taking place, analysts aren’t betting on a long-term rally for FIL. Brian “Ledger Status” Krogsgard recently noted that there are two billion FIL coins that will meet the market over time, making it illogical that the prices in the $30-100 region will last for long.

Related Reading: 3 Bitcoin On-Chain Trends Show a Macro Bull Market Is Brewing
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Prominent ICO Filecoin (FIL) Dives 30% as Short Exposure Explodes

Nick Chong , 2020-10-17 23:00:48

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NewsBlock © 2019 - 2020 All rights reserved.

NewsBlock © 2019 - 2020. All rights reserved.

While Bitcoin’s price seemingly moves without rhyme or reason — collapsing by dozens of percent and embarking on face-melting rallies on a whim — the cryptocurrency market is filled to the brim with fractals.

Related Reading: Analyst: Bitcoin Price Likely to Fall to Low-$8,000s as Chart Remains Weak

A brief aside: A fractal, in the context of technical analysis and financial markets anyway, is when an asset’s price action is seen during a different time. This form of analysis isn’t that popular, but it has proven to be somewhat valuable in analyzing Bitcoin.

One recent fractal popularized by a well-known cryptocurrency trader is implying that BTC is going to return to the low-$7,000s in the coming days.

Bitcoin Fractal Implies Retracement to Low-$7,000s

A well-known crypto trader going by “Tyler Durden” on Twitter recently posted the chart below, which shows that a Bitcoin price fractal may be playing out. The fractal has four phases: horizontal consolidation marked by one fakeout, a surge above the consolidation phase, a distribution, then a strong drop to fresh lows.

If the fractal plays out in full, BTC could reach the low-$7,000s again, potentially as low as $7,100. This would represent a 20-odd percent collapse from the current price point of $8,800.

It isn’t only a fractal that is hinting Bitcoin has the potential to visit its lows. As we reported on Saturday, Bloomberg believes that if the GTI Vera Convergence Divergence Indicator flips red, a downtrend could push the cryptocurrency back to $7,300.

Related Reading: Stephen Colbert Pokes Fun at Bitcoin in Monologue: Mainstream Gone Wrong?

Can Bulls Step In?

But again, many believe it is irrational to have such bearish interpretations of the cryptocurrency’s chart at the moment. As reported by NewsBTC earlier, Popular crypto trader Mayne recently noted that the “people waiting for $6,000” are irrational. He quipped that Bitcoin retracing and consolidating after its fourth-biggest bull move in history ($7,300 to $10,500, a 42% gain) is perfectly par for the course, but noted that it’s totally possible we can go lower from $8,800.

The medium-term technicals support this.

Trader and CoinTelegraph contributor FilbFilb found that by the end of November or start of December, the 50-week and 100-week moving averages will see a “golden cross,” which he claims is far more significant” for the Bitcoin market that other technical crosses.

Also, a Bitcoin price model created using Facebook Prophet machine learning found that the leading cryptocurrency is likely to end the year at just over $12,000. What’s notable about this model is that it called the price drop to $8,000 months in advance, and forecasted a ~$7,500 price bottom for BTC.

To put a cherry on the cryptocurrency cake, Crypto Thies observed that when Bitcoin bottomed at $7,300, it bounced decisively off the 0.618 Fibonacci Retracement of the move from $3,000 to $14,000, which correlates with the two-week volume-weighted moving average. He added that summer 2019’s consolidation was marked by Bitcoin flipping major resistances into support levels, implying that a bullish reversal and subsequent continuation is likely possible in the coming weeks.

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Nick Chong , 2019-11-10 12:00:38

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