Filecoin (FIL) went from $6.13 to $4.35 in less than 7 days. As of this writing, the altcoin is trading at $4.46 after initially falling to its lowest since December 1, 2023.
The Bears broke the $5 support line on June 15th, but FIL appears to have hit a local bottom. Here’s what on-chain and technical analysis tells us about price.
Demand is down, but the situation is improving
Filecoin sank due to continued pessimism and lack of demand for the cryptocurrency, according to a BeInCrypto survey. We analyzed the state of Weighted Sentiment and found evidence.
Weighted Sentiment is an improved version of Social Volume. Spikes in metrics occur when social volume is high and mentions of a property are positive on average. Conversely, a decline occurs when the majority of online comments are negative.
On June 7, Filecoin’s Weighted Sentiment soared to 5.54. During that time, the price was trading at $6.13. However, my reading volume has decreased over the past few days. At press time, the sentiment reading was -0.48.
Read more: Filecoin Staking: How to Get Started
In general, negative sentiment towards a cryptocurrency means that demand for that coin may be low. This is because market participants will make cautious moves as there is wider awareness that FIL, the token in question, may not rise significantly in the short term.
However, Filecoin’s social dominance has risen to 0.11% at the time of writing. Built on social data, Social Dominance measures the discussion of cryptocurrencies in the media compared to other assets in the top 100 by market capitalization.
As you can see in the chart below, a rise in this indicator signals a rise in prices. A decline leads to a decline. Therefore, FIL is in the process of recovering from its recent lows as long as its social dominance continues to increase.
FIL price prediction: $4.94 seems reasonable.
Looking at FIL from a technical perspective, the indicators are consistent with a potential bullish forecast. On the daily chart, the bulls are defending the $4.35 area and using it as support to prevent further decline.
If defenses remain firm, FIL could move towards the upper resistance at $4.04. Additionally, the Tom DeMark (TD) Sequential validates this outlook. TD Sequential marks the end of a trend and helps identify the beginning of a new trend.
The chart below shows that sellers are tired and buyers are taking advantage of their fatigue. If this trend continues, FIL price could rise to $4.94 as initially mentioned. If verified, this prediction could become a reality within the next 1-5 days.
Additionally, the Relative Strength Index (RSI) indicates that FIL is oversold. RSI is an oscillator that measures momentum using recent price changes. If the reading exceeds 70, it is an asset. overbought. However, anything below 30 means it is oversold.
At press time, the FIL/USD daily chart shows an RSI of 30.39, meaning the token is oversold and has reversed to the upside. If this upward momentum continues, the price of FIL will trade higher.
Read More: Filecoin (FIL) Price Prediction for 2024/2025/2030
However, this could be negated if another selling pressure hits the market. If this happens, the price of FIL will fall below $4.
The post Filecoin (FIL) Reaches 7-Month Low and Is Preparing for a Comeback appeared first on BeInCrypto.