Key Takeaways
What triggered XPL’s price crash?
The bulk of selling pressure came from unlocked supply sent to exchanges, with Wintermute’s activity aligning with the $1.68 top.
What’s next for the altcoin?
The cheap XPL attracted key players, but speculative interest was yet to reverse.
Plasma [XPL] price crashed by nearly half following an intense sell-off post-TGE (token generation event).
As of writing, the market cap dropped from $3 billion to $1.6 billion, wiping out most of the bulls who were chasing the “stablecoin supercycle” trade.
Contextually speaking, Plasma is a dedicated L-1 blockchain network for stablecoin and payments backed by Bitfinex, Tether, Bybit, and Peter Thiel’s Founders Fund.
Given its backers and the stablecoin hype, XPL became an instant hit when it was available for public trading on the 25th of September.
Presale investors saw returns of 19X, followed by a staggering 1,500% surge in the altcoin’s price, from $0.10 to $1.68, after its exchange launch.
However, just four days later, the price sharply declined, erasing much of the initial gains.
Source: XPL/USDT, TradingView
‘Team-driven dump’ accusations emerge
But four days after the launch, the price tanked 46%. It slipped from the $1.68 peak to below $1. at the time of writing.
Amid the crash, the community accused the team and the market makers, especially Wintermute, of driving the dump.
An evaluation of the claims by an analyst established that about 600 million tokens were sent to exchanges from the project’s wallet address.
Reportedly, Wintermute’s market-making activity on the coin picked up pace on the second day after the launch. The analyst added that this coincided with the day XPL topped out at $1.68.
Source: X
With about 4 million XPL selling pressure on a daily average, the analyst said that the team could have been responsible for most of the sell-off.
According to the project, about 8% of the XPL supply (800,000,000 XPL) was unlocked during the launch to “support DeFi activities.” Hence, this could be part of the supply, according to the analyst.
That being said, a user called the price dump ‘embarrassing’ for the Plasma team.
Whales buy, retail retreats
Meanwhile, a whale was actively accumulating the discounted XPL. The large player bought nearly 30 million XPL (worth $31.13 million) in the past three days.
But speculative interest was yet to show a reversal sign to confirm a potential strong recovery, as of press time. The Open Interest decreased from $1.86 billion to $1.20 billion over the past five days.
Source: CoinGlass
Additionally, XPL led the liquidation cascade in the recent 4-hour period, with about $10 million in losses incurred by leveraged bulls. That kept sentiment fragile.
But the latest correction has hit the golden zone between $.90-$1.0 on the Fibonacci retracement tool. In most cases, the level can act as support. However, cracking below it could reinforce further bleeding out.
