Storage Protocol Tokens Slide as Traders Short FileCoin and Storj

Short sellers were relentless on storage protocols Filecoin (FIL) and Storj (STORJ) over the weekend, with record shorts being placed on FIL.

FIL is down 28% over the past five days, with STORJ down 20%. Both have underperformed ether (ETH), which is down roughly 10% during the same time period.

FIL and STORJ chart. (TradingView)

Data from CoinGlass points to record liquidations on long positions for FIL and STORJ as last week came to a close.

FIL Liquidations (CoinGlass)StorJ Liquidations (CoinGlass)

Nearly $5.7 million long FIL positions were liquidated on December 16, according to CoinGlass, while $365,000 in STORJ long positions were also liquidated. Internet Computer (ICP), a similar protocol, also had $500,000 in long positions liquidated.

Open Interest data from CoinAlyze suggests the worst is yet to come, with an 11% jump in open interest during the last 24 hours to about $52 million. Continued negative funding rates indicate that this money is coming in to short.

Traders might be questioning the utility of storage protocols, which have a massive — and growing — storage capacity but no obvious use case to utilize it.

Filecoin says it has a capacity of 15.34 Exbibytes, or 17.6 million Terabytes, but lists storage of OpenSea NFTs as one of its primary clients, raising questions about how much of its storage network is truly utilized.

On OpenSea, monthly volume dropped to $159 million from around $4.8 billion at the start of the year, a decline of about 97% and nearly reflective of Filecoin’s decline from $236, when it listed on April 1, to $3 today.