The price of Filecoin's native FIL token has rallied by more than 40% in the past 48 hours, spiking from $53.538 to as high as $75 across major exchanges, reaching its highest point since October 2020.
FIL is now the 22nd-largest cryptocurrency, with a market capitalization of over $4 billion. However, its circulating supply is 58 million, or just 3% out of a maximum total of 2 billion.
There are two possible reasons behind its uptrend, namely its fundamentals such as the growth of its storage capacity and transaction volume in addition to interest from investors, exemplified by the addition of FIL by Grayscale.
Around eight hours after Winklevoss’s statement, Grayscale CEO Michael Sonnenshein announced the addition of FIL to Grayscale’s lineup of investment products.
Why is Filecoin growing so fast?
Typically, the growth rate of a blockchain protocol can be analyzed using three metrics: developer activity, mining activity and transaction volume.
The developer activity of a blockchain network is crucial for its long-term growth and overall investor confidence because a blockchain is a computing network and digital ledger at its core.
The mining activity of a blockchain network demonstrates the confidence of miners and the level of computing power behind the protocol.
Lastly, the transaction volume of a blockchain network indicates the level of user activity, which showcases the adoption of the protocol.
In recent weeks, Filecoin has seen solid growth across all of the three above-mentioned areas. Winklevoss noted:
"The amount of network storage power, active miners, and Github contributors continues to grow on the Filecoin $FIL network. Not surprised to see price rocketing."
Meanwhile, the demand for scalable blockchains with larger capacity has risen due to the high fees on Ethereum and the increasing interest in layer-two technologies.
This use case is seemingly being recognized by investors. The accelerating pace of Filecoin adoption and its growing market capitalization has likely contributed to Grayscale's decision to add FIL to the Grayscale lineup.
ANNOUNCEMENT: 5 new products have been added to the @Grayscale line up!— Michael Sonnenshein (@Sonnenshein) March 17, 2021
Basic Attention Token $BAT
Interested? https://t.co/YfK2YUKgCj pic.twitter.com/jLqDph4MEH
It all coincides with a big spike in storage capacity
Filecoin differs slightly from other layer-one blockchain protocols in that it is a peer-to-peer network specifically designed for file storage with built-in economic incentives to ensure files are stored reliably over time.
On Feb. 16, Colin Evran, ecosystem lead at Filecoin, said that the Filecoin ecosystem reached 2.5 exabytes of storage capacity — a "pivotal moment" for the blockchain.
Filecoin reached 2.5 exabytes merely three months after surpassing 1 exabyte of storage in November 2020, as Cointelegraph reported.
“The importance of an open, decentralized internet has never been greater. Reaching 2.5 exabytes of storage capacity is a pivotal moment for Filecoin and the wider Web 3.0 movement. Our global community has contributed its expertise, valuable insights, hard work, and resources to build a robust foundation for humanity’s most precious knowledge."
In the near term, the main hurdle of Filecoin remains whether it can compete against the dominant layer-one blockchains to onboard decentralized applications and decentralized finance projects as it attempts to improve interoperability and scalability.