The price of Filecoin/FIL has plummeted, what crisis is behind the development?
The Filecoin mainnet was officially launched on October 15th. FIL officially landed on major exchanges on that day. The issue price of FIL exceeded US$200, then fell back to US$60, opening higher and lower. So far, the price of FIL has been around US$25, which has brought retail investors on the verge of collapse. There are even more popular articles on the market that explain the reasons for the FIL's sharp drop, making retail investors feel that they have been severely cut leek and regret it.
This time, from an objective perspective, I will explain the reasons behind the FIL price plummet and the future development direction of Filecoin.
Once online, the fundamental reason for such large fluctuations in FIL prices is that Filecoin is currently in the cycle of "staking-mining-block production", with only staking requirements and no real storage business requirements. The staking demand could not accept particularly high currency prices, so the FIL price fell below $30.
If the FIL currency price is more than 100 US dollars, the ratio of new miners' hardware investment to pledge investment is 1:1, that is, after miners invest 1 million to purchase hardware equipment, they need to invest 1 million funds as pledge. Such a high currency price is for most For miners, they do not have this courage and financial strength.
When the currency price is US$20, the ratio of hardware investment to pledge investment is 1:0.2, which means that after miners invest 1 million to purchase hardware equipment, they only need to invest another 200,000 as pledge, which can greatly reduce the burden of new miners. The pressure of investment has prompted the influx of more new miners, and old miners will also choose to continue investing, thereby promoting the development and growth of the Filecoin basic network.
If the storage business is not considered, when the network benchmark reaches 2.5EB, the release amount will reach 100%. At this time, the supply will increase, and the pledge demand will gradually decrease. The supply exceeds the demand, and the currency price will fall again.
Having said that, the mood of many investors fell to the bottom again. Don't worry, let us return to the reason for the sharp drop in currency prices. The reason why the currency price is relatively low now is because there is no storage business and the Filecoin application has not been implemented on a large scale. As long as there is a massive influx of storage demand and supply and demand balance, the currency price will continue to rise.
Recently, official actions have been frequent, also emphasizing Fileocin's ecological construction and encouraging participants to actively develop storage businesses. Space Race 1 and 2 have also been encouraging storage scale, storage requirements and application landing, and strive to create truly landable applications. Storage business is crucial to the construction of Filecoin's ecosystem.
Nowadays, many Filecoin enthusiasts are actively developing Filecoin applications. It is expected that decentralized storage applications will be launched in one month, and there will be a spurt of growth within three months.
Therefore, there will be a large number of developers buying FIL for storage. Once the supply and demand balances, the price of FIL will rise again and reach our expected goal.
Filecoin's current situation is just like the early Ethereum. On August 7, 2015, the first historical transaction record of Ethereum occurred and was added to the exchange for the first time. The price at that time was $2.77. But three days later, the price of Ethereum had shrunk by 4 times, falling to $0.68.
As of early 2017, the price of Ethereum was only $8. On February 23, 2017, Ethereum was added to the social trading platform "eToro" (eToro), which also became the starting point for Ethereum's faster growth.
After that, there were more and more developers of Ethereum, and the price of Ethereum began to see a new increase. In just ten days, the price almost doubled. On May 5, 2017, the price of Ethereum soared to $95.
On June 12, 2017, the price of Ethereum reached US$400, and the return on investment reached 50 times! Not only that, the market value of Ethereum as a percentage of the total market value of the entire cryptocurrency market has also reached a record high, reaching 31.5%, compared with only 4% at the beginning of 2017.
Ethereum has been widely popularized and used in the crypto community and in the environment of DApps developers, as well as the increased demand for Ethereum tokens from initial token issuance projects (many projects have chosen ETH as the main payment method for their token sales. Cryptocurrency), prompting the price of Ethereum to continue to rise.
On January 13, 2018, as the demand for ETH greatly exceeded the supply, the price of Ethereum quickly reached a high of $1,400 in just 4 weeks.
to sum up
Through the history of Ethereum's price fluctuations, we can find that with the continuous improvement and growth of various aspects of the ecosystem, the project has gradually become known and widely used and applied, and the storage market gradually expands, and its currency price will be stable rise.