Filecoin has surged seriously higher over the past few days even while Bitcoin has stalled in the $13,000 range.
The price of the leading altcoin recently passed above $35, the highs of the past five days. In the past 24 hours alone, FIL has gained 32.2% against the U.S. dollar per data from CoinGecko.
Analysts attribute this rapid Filecoin price action to a “short squeeze,” whereas short positions holders were forced to close their positions in tandem, resulting in a spike in buying volume. Short squeezes often take place when the funding rate of a futures market is extremely negative, forcing investors out of their positions.
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Filecoin Surges More Than 50% From Its Lows
From the lows of $21 earlier this week, Filecoin has surged more than 50%. The coin peaked just shy of $36 earlier today, marking a strong reversal from the aforementioned lows seen just 48 hours ago.
As aforementioned, many analysts think that this price action is a byproduct of a “short squeeze.”
The funding rates of leading FIL futures markets were dramatically in the negative prior to the move. That means that shorts had a lot of incentive to close their positions, thus driving the price higher as the shorts are covered.
Even now, hours after the squeeze, the funding rates are still well into the negative. On FTX, those that are shorting FIL are charging -0.2526% every hour, making it expensive to keep those positions open.
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This rally comes after the “FUD’ was dispelled over a purported “miner strike” in the Filecoin ecosystem. It was reported extensively online that some Filecoin miners, which maintain the network, were turning off their machines due to an interesting incentive structure.
This has since been dispelled by members of the FIL community. They suggest that miners remain profitable and are proving that they can store users’ file just fine.
(7.0) I was asked about a supposed “Miner Strike” — This is nonsense. There is no strike. Miners are proving their storage just fine. There’s been no power loss out of the ordinary in the network. Miners are following the protocol, and making a TON of money doing so. pic.twitter.com/3U9MN0JGm9
— Juan Benet (@juanbenet) October 19, 2020
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