Filecoin's Bullish Trend: Is $2 Within Reach?

Filecoin (FIL) has experienced a notable resurgence, sparking interest among investors. With a notable rise in trading activity and accumulation from top holders, there are signs of a bullish trend potentially leading towards $2. However, for this bearish scenario to remain intact, FIL needs to maintain certain price levels.

Key Takeaways

A Buy Sell Delta of $2.3 million and a 32% increase in holdings among top holders highlight aggressive accumulation.
For the bullish outlook to stay, FIL needs to close a daily candle above the 20EMA at $1.65.
After hitting a low of $1.30, Filecoin surged by 10.5% to a local high of $1.70 before slightly retracing to $1.69 at the time of this report.
Trading volume for the altcoin surged by 167% to $276 million, indicating a strong capital inflow.

Analyzing Filecoin's 10% surge: Is $2 next to fall?

Filecoin Sees Strong Buyer Activity

At the end of October, Filecoin was under significant selling pressure as sellers controlled the market. However, on November 1, the momentum shifted dramatically as buyers stepped in.

In just a day, Filecoin recorded $20.5 million in Buy Volume, outpacing $18.2 million in Sell Volume, as noted by Coinalyze. This resulted in a Buy Sell Delta of $2.3 million, pointing to robust retail accumulation.

Filecoin buy sell volume Source: Coinalyze

Additionally, there's been a resurgence in demand from Filecoin’s top holders, who increased their holdings by nearly 32% to 9.5 million. According to Nansen, top holders purchased 201,000 tokens while unloading only 140,000 FIL tokens. Increased accumulation among top holders typically signals strong market conviction and anticipations of price growth.

Fil top addresses Source: Nansen

This noteworthy rise in spot accumulation from both retail and whale investors signifies a meaningful change in market sentiment. A scenario where buyers surpass sellers usually leads to increased demand, driving prices upward.

Futures Market Demand Increases

As the market began to rebound, Filecoin investors oriented themselves toward Futures trading strategically. Nansen data indicates that over the past 24 hours, Filecoin recorded 659,000 Contracts Bought versus 572,000 Contracts Sold. This led to a Net Position Change of 87,000, demonstrating that buyers had the upper hand in the Futures market.

Filecoin perpetuals Source: Nansen

Typically, when buyers express dominance in the Futures market, it reflects strong bullish sentiments as leveraged traders expect prices to continue rising, indicating that many participants are looking to go long.

Profit-Taking Could Be a Risk

As Filecoin continued to rally, investors who had previously been in the red returned to capitalize on profits. According to CoinGlass, the altcoin enjoyed a positive Spot Netflow for three consecutive days; however, the most recent figure shows Netflow at $1.28 million, down from $2.29 million the day before, indicating inflow fluctuations.

Filecoin spot netflow Source: CoinGlass

A rise in inflows on exchanges can indicate aggressive selling, which historically leads to price declines when supply exceeds demand.

Momentum Indicators Provide Insights

According to AMBCrypto, Filecoin benefited from buying activity as buyers sought to seize the dip, stimulating demand in both spot and Futures markets. Consequently, the altcoin’s Stochastic RSI reached 89, an overbought level that signifies sustained buyer strength.

Filecoin Stoch & EMA Source: TradingView

While such elevated momentum indicators often signal potential volatility, they can remain within overbought territory for a considerable time before experiencing a market correction. If buyer strength persists, Filecoin is poised for continued price gains. If the trend continues, bulls are likely to target the 50EMA at $1.88, paving the way for ambitions to breach the $2 resistance level and reclaim the 100EMA at $2.10. Importantly, FIL must maintain its close above the 20EMA at $1.65 for this bullish trend to sustain. Conversely, if sellers take over, Filecoin could fall back to the $1.50 support level.