The company behind Filecoin is going to reduce its workforce by 21%. FIL may result from a reversal as buying pressure eases.

In a press release published Feb. 3, Protocol Labs, the company behind the decentralized file storage network Filecoin [FIL]announced it would lay off 21% of its workforce.

Citing “extremely challenging economic downturn” as the reason for the move, CEO Juan Benet noted that the cuts were necessary so that the company could weather the protracted economic downturn and ensure future sustainability.

Read Filecoins [FIL] Price Forecast 2023-24

According to the press release, the proposed layoffs will result in a reduction of Protocol Labs’ headcount by 89 positions and will impact individuals in:

“PL Corp, PL Member Services, Network Goods, PL Outercore and PL Starfleet.”

There was no mention of whether the layoffs affected the Filecoin team.

FIL due to price reduction

At the time of writing, FIL was trading at $5.60. Also affected by the price rally in the market over the past month, FIL’s price has surged 86% since the start of the year, returning it to pre-FTX collapse levels, data from CoinMarketCap revealed.

However, a look at the movements of the alt on a daily chart revealed that FIL was trading in a tight range on January 22 and remained in that position at the time of writing.

When an asset’s price fluctuates within a narrow range, it may indicate indecision in the market, where both buyers and sellers have been reluctant to make a move. It can also indicate a lack of market momentum or volume, making it difficult for the price to break out of the range in either direction.

Since this began, buyers lost control of the FIL market. A steady decline in the Alt’s Positive Directional Indicator line (+DI) confirmed this. At the time of writing this was at 22, poised to cross the Negative Directional Indicator (-DI) line. Once this happens, the sellers would regain full control of the market and a price reversal would begin.

Realistic or not, here is the FIL market cap in terms of BTC

Furthermore, an assessment of the Chaikin Money Flow (CMF) revealed that a bearish divergence existed between this indicator and the price of FIL since mid-January. While the price of FIL rose, the CMF fell.

This type of divergence is common in a market where buying pressure is weak and the price increase only reflects overall market growth. It is a bearish signal and may indicate a possible trend reversal or a market correction.

Source: FIL/USDT on TradingView

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