Analyzing Filecoin (FIL): Will $5 Support Hold or Fold?

Filecoin (FIL) price is one of the many altcoins that will likely continue witnessing corrections owing to bearish market cues.

The investors backing off in terms of interest and inflows will be a key factor in noting a price decline.

Filecoin Loses Its Supporters

Filecoin’s price fell from $10 at the beginning of the month to the market value of $5.9 today. This drastic correction seems to have spooked the investors considerably, given the mammoth losses that occurred in the last few days.

The derivatives markets’ chart shows that in the span of four days, the Open Interest (OI) has dropped by over 50%. OI is the total number of outstanding derivative contracts, such as futures or options, that have not been settled. It reflects market participation and liquidity.

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OI falling from $371 million to $186 million shows that the investors have settled half of the put and short contracts. This means that they have backed off owing to the volatility, and these are mostly long traders.

This is evident from the liquidation chart, which shows that in the last four days, about $31 million worth of long contracts were liquidated. Consequently, Filecoin will witness a pullback from bullish traders who are expecting a price rise.

FIL Price Prediction: Multi-Month Low on the Cards

Filecoin’s price falling through the support of $5.6 will result in the altcoin falling to the low of $4.6. This price point was last tested as a support floor in December 2023, marking a four-month low.

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However, a bounce back from $5.6 will lead to Filecoin’s price breaching and flipping $6.3 into support. This will result in the altcoin invalidating the bearish thesis and eventually rising to $7.