Plasma [XPL], an L-1 blockchain network designed for stablecoins and payments backed by industry giants like Bitfinex and Tether, experienced a dramatic price crash shortly after its public launch. Initially hailed for its potential within the "stablecoin supercycle" and boasting an impressive 1,500% surge from its initial price, XPL saw its market capitalization plummet from $3 billion to $1.6 billion in just four days, wiping out significant investor gains.
The Dramatic Fall of XPL
After an initial parabolic ascent that saw presale investors realize 19X returns and the altcoin reach a peak of $1.68, XPL's fortunes sharply reversed. Just four days post-TGE (token generation event), the price tanked by a staggering 46%, dipping below $1. This intense sell-off sparked community accusations of a "team-driven dump," fueling speculation and concern among investors who had chased the early hype.
Unlocked Supply and Market Maker Scrutiny
Investigations into the crash highlighted the role of unlocked token supply and market maker activity. An analyst's evaluation revealed that approximately 600 million XPL tokens were transferred from the project's wallet address to exchanges, coinciding with the price peak. Furthermore, market-making firm Wintermute's activity on the coin reportedly intensified on the second day after launch, precisely when XPL hit its $1.68 high. The project had unlocked 8% of its total supply (800 million XPL) at launch, ostensibly to "support DeFi activities," a move now scrutinized as a potential contributor to the selling pressure.
Shifting Market Dynamics
Amidst the chaos, some dynamics emerged, indicating a cautious yet potentially pivotal period for XPL. While retail speculative interest showed signs of retreat, marked by a decrease in Open Interest and a $10 million liquidation cascade for leveraged bulls, "whales" began to accumulate the discounted asset. One large player reportedly bought nearly 30 million XPL, totaling over $31 million, suggesting long-term confidence despite the fragile sentiment. The price correction has also touched a critical Fibonacci retracement zone between $0.90-$1.0, which could serve as a support level, though a breach below it could signal further declines.
