Filecoin was one of the best performing cryptocurrencies on Friday after rallying more than 18% to attain a price of $90.40. Its weekly performance indicates that it is up 34.30% but what makes it more interesting is that its current rally is taking place while most of the other top cryptocurrencies are in the red.

Historic performance indicates that the FIL token peaked at 238.20 in April before embarking on a strong bearish downtrend which appears to have bottomed out at $55 after gaining support at that level in the last few days. Interestingly, it turned bearish while the rest of the market was still enjoying its strong bullish run and now seems to be moving in the opposite direction once again. In case the price tanks again, it will likely gain support at the $70 price level.

There does not seem to be any recent developments supporting the recent surge, which means that its rally was because of a price pump and this is supported by the recent spike in buying volume. In other words, some investors saw that the cryptocurrency has been massively discounted after its bearish performance in the last month.

FIL had been trading in a ranging market before the crypto market’s bearish correction in the second week of May. This means that the price will likely have to recover back above $130 to regain its average true range. That said, there is still a chance of more sell-offs as some of the buyers who bought below $60 start to sell off for short-term gains.

Filecoin’s recent spike will undoubtedly catch the attention of investors seeking the next growth opportunity. However, those opportunities require investors to get in early to reduce the risks associated with a pump and dump. Long-term hodlers may see the discounted price as an opportunity to buy at a favorable entry point. In that case, it is necessary to understand some of the intricate details of the project such as the reason for its existence and the mechanism behind it.

Filecoin is a blockchain-based platform designed to act as a market for buyers and sellers of digital storage space. Think of it as the decentralized version of cloud storage solutions from companies like Google. The platform provides an opportunity for anyone to provide storage services to those who need it, while buyers access highly secure decentralized storage at affordable prices.

The platform aims to take advantage of the growing need for storage services. The cloud storage market is currently valued at $46 billion annually and is expected to grow to $220 billion by 2027 especially as data takes center stage thanks to increased smartphone adoption. The current incentive for using Filecoin is that it is much cheaper than what other platforms offer and blockchain technology makes it extremely secure.

FIL is the native token used on the platform to facilitate the buying and selling of storage. Anyone who wishes to participate on the network to offer storage is required to purchase FIL which is then used as collateral. They can earn fees for storage, as well as for the storage miners that mint blocks. FIL has a lot of growth potential as the platform continues to benefit from strong demand.

Concerns about the sale of user data may also encourage more people to start using Filecoin. In an ideal situation, higher participation on the Filecoin network will allow miners to generate more revenue. The higher their earnings, the more valuable FIL will become, which means that it might be a good coin for long-term hodlers and even more so for market participants.