- Filecoin price soared to a multi-month high on Friday.
- The developers will launch FVM on March 1.
- There are concerns about the network’s usage future.
Filecoin price had a spectacular performance on Friday, continuing the remarkable rally that started a few weeks ago. FIL, the network’s token, soared to a high of $7.28, the highest point since August last year. Like other cryptocurrencies, it has soared by over 1000% from its 2022 lows.
Filecoin Virtual Machine (FVM) launch
The main catalyst for the ongoing Filecoin price rally is the announcement of the upcoming Filecoin Virtual Machine launch. In a statement, the developers said that the new product will be launched on March 1.
FVM’s testnet was launched in 2022 and has been going through refining as the developers hope to launch it in its best form. The product, when live, will become a competitor - as well as a partner - to Ethereum Virtual Machine.
It will become a layer 1 blockchain that will make it possible for developers to create decentralized applications (dApps) that will leverage Filecoin’s technology. For starters, Filecoin is a platform that uses decentralized infrastructure in file storage.
The benefit of launching its FVM instead of leveraging existing blockchains is that its fees will be significantly lower. Also, Filecoin will be able to scale the platform to ensure that speeds are much faster.
Read more: How to buy Filecoin.
Filecoin challenges remain.
Filecoin will be launching its FVM at a time when some are questioning the value of the network. While there is support for Web3 services, people seem to be preferring Web2 solutions like Google and Microsoft.
Data shows that the total Filecoin fees have declined sharply in the past few weeks after peaking in January. The network made about $21k in fees on Wednesday this week. At its peak in January, it made over $77k in total fees.
A key challenge is the fact that Filecoin was mostly used to store non-fungible tokens (NFT) through its partnership with companies like OpenSea. After peaking in Q1’22, the volume of traded NFTs has constantly been on a downward trend.
On a positive side, the number of developers in Filecoin has been growing. The number of active creators rose to a high of 115 on Wednesday, the highest level this year. At some stage, Filecoin had more developers than Ethereum,. Code commits in the network has remained high.
So, will the Filecoin price maintain its bullish trend. In my view, we could see the FIL price continue rising in the near term and then pull back in the coming days. This is known as buying the rumour and selling the news.
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