Why is Filecoin Cheap?

Last Updated January 14th 2022

6 Min Read

Why is Filecoin price so cheap? We see this question a lot, and we understand why. Filecoin is still an early-stage technology, protocol, and ecosystem. It hasn't reached the mainstream yet.

Although its future potential is huge, many investors don't see it because it's not currently in their wheelhouse (we like to think of storage as a commodity). Even if you do understand storage, it's hard to get excited about Filecoin because the technology isn't mainstream yet.

Storage is an integral part of our lives, yet most people haven't even heard of this crypto before! We don't expect this question to go away soon (even though we think that won't be difficult for readers to understand).

And so, we think that lack of exposure has led to Filecoin's market valuation being a bit low.

Of course, there are several other reasons why the price of Filecoin has remained relatively low. In this guide, we look at why this is the case and whether the asset is still a good investment despite its low price.

Let's start with the basics.

What Is Filecoin (FIL)?

Filecoin is a cryptocurrency created by Protocol Labs. Protocol Labs is currently working on several other projects, including InterPlanetary File System (IPFS), which aims to decentralize the web.

When you first look at Filecoin, it may seem like yet another decentralized storage project or "data cloud." The technology that Filecoin uses is different, but the premise is the same. Because it's very similar to other decentralized storage projects like Sia and Storj, Filecoin is often compared with them (and usually unfavorably).

Filecoin treats storage similarly to Bitcoin. Bitcoin rewards miners for processing transactions and creating blocks. Filecoin rewards miners for storing users' data or "other people's files."

These miners are called "Filecoin miners" or "miners for short." They provide storage space to users and, in return, receive payments in Filecoin tokens. Instead of mining Bitcoin, they burn electricity by running special software that makes sure the network is secure.

Although it might seem like a simple idea, the Filecoin network is actually very complex. There are several reasons why this is the case, but it's mostly because of the following three features;

Miners are paid only after they have stored a user's data for some time (which can be up to 3 months)
Users want to make sure that their data is stored as close to them as possible
Filecoin miners compete with each other for rewards, so they need a way to differentiate themselves from each other

All of these factors work together to create an extremely demanding and complex system. This has made creating the Filecoin network difficult and expensive.

Crypto asset investing is highly volatile and unregulated in some EU countries. No consumer protection. Tax on profits may apply.

Filecoin Price History

Filecoin's ICO took place in August 2017. The price of one FIL token at the time was roughly $10. Since then, Filecoin has seen several highs and lows. In December 2017, it reached a high of $26.9 before crashing down to Earth and hitting a low of $7.9 by mid-March 2018. It then went on a short rally that stabilized at around $10 to $14 in April and part of May 2018.

From there, the price of Filecoin remained relatively low. I even traded as low as $2 in 2018.

The trouble started around mid-2018 when the coin began dropping, and by December, it was down to $2. It then traded below $4 until June 2019 where it went as high as $7. However, the growth wasn’t promising, and the coin struggled to go above $10 until towards the end of May 2020.

This is where it began picking up momentum, and by mid-October 2020, Filecoin was trading at about $60 per coin. This was followed by a dip that sent it to around $22 before rising quickly again to reach its current all-time high of $237.24 on 1st April 2021.

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Price of Filecoin Today

Although the price of Filecoin has remained relatively low, it's interesting to note that its all-time high (ATH) is above $230, and its market cap is still within the top 40 most valuable cryptocurrencies.

Of course, this is not very impressive when compared with Bitcoin, which has an all-time high of $68,789.63 and a market cap of over $800B.

FIL price may be low, but it still ranks among the top 40 cryptos by market cap. The main reason for this is that Filecoin has a maximum supply of just under 147 million coins. This means that even though the price may be low, the market cap still sits within the top 40 cryptocurrencies.

Despite its current market cap ranking and price history, we think there are several reasons why investors should keep an eye on Filecoin. One of them is that Filecoin was the subject of one of the most successful ICOs ever, which raised over $257 million in 2017.

Another reason is that it's currently being developed by Protocol Labs, which has a good record of delivering on its promises. The third reason is that it may play an important role in the future of blockchain technology, as it's an integral part of a larger project called "Filecoin Network."

Check Out: Is Filecoin A Good Buy?

So, Why Is Filecoin So Cheap?

In a nutshell, Filecoin is cheap because it's very new, and its development has been sluggish. Filecoin only launched the mainnet in October 2020, and since then, it has been struggling on the charts. Also, the fact that it has yet to prove itself as a valuable platform makes investing in Filecoin risky.

However, we do believe these seem like small prices to pay if the mainnet turns out to be successful and if Protocol Labs can deliver on its promises.

But remember, this is only for the long term. If you are thinking of investing in Filecoin, we recommend you wait and see how it performs over the next few months. If the price continues to drop, we would not rule out a potential correction that could push it well below $10.

The fact that most people also haven't heard about Filecoin has contributed to keeping its price low. This actually makes it a good time to invest, as the coin is on sale.

We don't know how low Filecoin will go before it starts its next rally, so keep an eye out for announcements by Protocol Labs and news of developments on the mainnet to find out if this is the right time to buy.

Is Filecoin A Good Investment Despite Its Low Price?

We think it could be, especially for long-term hodlers who are willing to wait until the platform is proved. We believe this could turn out to be an excellent investment if investors can hold through the lows and let their FIL tokens rise in value once Filecoin starts making good on its promise of becoming a valuable decentralized storage network.

Filecoin's low price makes it an attractive investment for hodlers who are willing to wait. If the mainnet proves successful, then this crypto could have a huge potential upside.

Conclusion: Will The Price Of Filecoin Go Up?

We think that investors should keep an eye on Filecoin, especially if they are hodlers who believe in the future of blockchain technology. The success of its mainnet could turn out to be a milestone for decentralized cloud storage.

Filecoin currently ranks among the top 40 cryptos by market cap, and it has a maximum supply of just under 147 million coins. We think that this makes the price volatile, and we don't recommend investing in Filecoin at the moment if you plan on short-term trading.

That said, we do believe it has a lot of potential as an investment for long-term hodlers who are willing to wait until the platform proves itself as a valuable storage method.