Filecoin surges 14% as 6-year vesting schedule nears its end: What’s next?

Filecoin [FIL] is on a strong bullish run. Since it successfully defended the $1 support level four days ago, the altcoin has closed with higher highs.

Over the past 24 hours, the altcoin flipped the $1.2 resistance and touched a five-month high of $1.27.

As of this writing, Filecoin was trading around $1.24, marking a 14% surge on the daily charts. Over the same period, its trading volume climbed 150% to $269 million, highlighting elevated market participation. 

Filecoin’s vesting schedule to end

Filecoin is rallying amid rising optimism over the concluding vesting schedule. On the 15th of October, the six-year vesting schedule for Protocol Labs and the Filecoin Foundation will come to an end.

The termination will result in annual FIL emissions dropping by a staggering 75%. With the expected supply entering the market falling to  22 million FIL from 89 million, marking over a 67 million drop in releases. 

This change in supply dynamics marks the largest shift in the token supply since its mainnet launch. 

Usually, reduced supply in the market increases scarcity, thus reducing market pressure, which helps in strengthening upside momentum. 

The derivatives market turns overly bullish

With the market in anticipation mode, speculative demand returned to the market. According to CoinGlass, Filecoin’s Open Interest (OI) climbed 23% to $312 million while the Derivatives volume rose 103% to $613 million. 

The rising OI and volume indicated higher participation and capital flows as traders opened new positions, either shorts or longs. 

Meanwhile, the Long/Short Ratio climbed 1 across major tracked exchanges, with the ratio on Binance holding above. Such elevated levels suggest that traders were bullish and mostly took leveraged longs. 

Could profit takers derail the momentum?

As expected, the recent price hike attracted profit-taking. Over the past three days, Filecoin Spot netflow has remained positive for three consecutive days. 

After FIL rose above $1.2, the altcoin’s netflow rose to $2.5 million on the 11th of October. Over the past 24 hours, the netflow was around $1.74 million. 

A positive netflow for a prolonged period suggested more sales than buys. Historically, higher inflows have increased supply, thus weakening the upside structure. 

What’s next?

Filecoin upside pressure momentum currently holds strong despite the profit realization, as the RSI shows. 

The altcoin’s Relative Strength Index (RSI) sits deeply within the bullish zone, holding around 66. Here, the indicator suggests a strong bullish pressure and signals that the trend is likely to hold. 

Therefore, if the positive sentiment around the vesting schedule holds, and bulls take in profit takers, the altcoin could clear $1.3 resistance and eye a close above $1.32. 

However, the risk arising from profit takers is an important note, and if it persists, Filecoin will struggle to hold $1 and potentially revisit $0.93.

Final Summary

• Filecoin’s vesting schedule for Protocol Labs and the Filecoin Foundation will come to an end on October 15. 
• Filecoin extended its bullish streak, surging 14% to a five-month high.