The “Filecoin” project is one of the well-known and famous names in the crypto arena.

The Filecoin project got off to a strong start as it managed to raise more than $250 million in ICOs in 2017, launching its mainnet in October 2020.

Then the digital currency FIL began its upward journey, the most important of which we will discuss in this article.

The Filecoin project aims to create a data storage and retrieval method based on the blockchain system.

The digital currency index “FIL” is up 146% in 7 days and has increased by more than 430% since the beginning of March.

After the cryptocurrency “FIL” crossed the $100 level on March 26, the “Filecoin” project coin continued to hit a new all-time high, reaching the $216 level today and still fluctuating at the time of writing this article.

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The recent rise in the price of the currency contributed to the rise in its ranking in the list of the largest digital currencies in terms of total market capitalization, as the currency is now ranked at the time of writing this article in eighth place with a total market value of 13.5 billion dollars.

What are the main factors and reasons behind the skyrocketing price of the digital currency “Filecoin”?

1- IPFS communication protocol:

The Filecoin project is based on the Interplanetary File System (IPFS) communication protocol.

The IPFS file system is a network transfer protocol designed to create continuous and distributed file storage and sharing.

Therefore, Filecoin now has the capabilities of storing documents on the blockchain, which is different from the blockchain of other cryptocurrencies such as Bitcoin.

The system has a built-in block reward mechanism to encourage the expansion of network capabilities, so that the entire system has enough storage space to handle the continuous growth of stored data, thereby ensuring long-term secure file storage and network security stability.

This is one of the reasons behind the high prices as Filecoin has huge application scenarios and market potential as a distributed storage network that serves the global human community.

Read:Ethereum founder talks about price predictions and Ethereum fees after the upcoming upgrade

2- Support from major institutions:

On March 17, Grayscale officially launched five new crypto-based mutual funds, including Filecoin.

New funds recently launched by Grayscale include:

• grayscale Livepier trust.
• grayscale philicoin trust.
• grayscale decentralization trust.
• grayscale chain link trust.
• grayscale Primary Attention Token trust.

According to data from Bybt, Grayscale has increased its holdings of 29,554 Fils over the past 24 hours, and currently holds a total of 45,554 Fils, with a total value of approximately $8.58 million.

On March 23, Hisaishi Capital announced the official launch of Bitcoin, Ethereum and Filecoin digital asset funds.

Hisaishi’s special fund will focus on the global bitcoin trajectory, the ethereum environment, distributed storage (FIL), and decentralized finance (DeFi).

On March 24, Fenbushi Capital also announced the completion of fundraising for the launch of the Filecoin Ecological Special Fund with a final management size of 300,000 FIL.

3- Partnerships with prominent crypto companies:

On March 24, the Filecoin project announced its integration with Chainlink.

Read:Report: Hacking of the latest “Harmony” crypto project linked to North Korean hackers

This will help Filecoin improve the private storage function and automate access to other blockchains while establishing a connection with Ethereum.

On March 27, the Filecoin project officially released a tweet stating that it will be collaborating with streaming protocol Livepeer to implement a joint work experience.

This will allow Filecoin miners to also become Livepeer miners by storing the converted video and mining data on the Filecoin network.

4- Reducing the production of “Filecoin” coins on April 15th:

According to official sources, Filecoin will reduce production on April 15th.

The reason is that the “FIL” obtained by all holders of the “Filecoin” agreement (SAFT) is subject to restrictions on time periods of 6 months, 1 year, 2 years and 3 years.

The SAFT year one will end on April 15th.

At present, the original production of “Filecoin” is around 648,000 units per day.

After the implementation of the semi-annual SAFT agreement on April 15, the daily circulation of Filecoin will be reduced by 280,000 units, which means a decrease of 43.2% of daily production, which will contribute to reducing the actual circulation of Filecoin.

This low offer will stimulate the possibility of a future price increase for the cryptocurrency Filecoin.

These were the most prominent reasons and factors that made the digital currency “FIL” soar and emerge as one of the best performing digital currencies in the month of March 2021.

Read also:

What is the Filecoin Project and its Digital Currency (FIL)? What is the importance of the project in the crypto market?

Three main trends expected for the crypto market in 2021