The price of Plasma (XPL) crashed by 46% just days after its token generation event, erasing most of the gains from a staggering 1,500% surge that saw it rise from $0.10 to an all-time high of $1.68. The market capitalization plummeted from $3 billion to $1.6 billion, with the sell-off intensifying four days after the public trading launch on September 25.
Plasma, a layer-1 blockchain focused on stablecoins and payments, is backed by major entities including Bitfinex, Tether, Bybit, and Peter Thiel's Founders Fund. Despite this strong backing, the crash was driven by unlocked supply of 800 million XPL tokens (8% of total) sent to exchanges, allegedly for DeFi activities, and market-making activity from Wintermute that coincided with the price peak.
Community accusations of a 'team-driven dump' emerged, with analysts noting that about 600 million tokens were moved to exchanges, contributing to daily selling pressure of around 4 million XPL. Concurrently, FUD spread regarding Plasma's team being linked to the controversial Blast project, though some analysts dismissed this as baseless and organized manipulation. Profit-taking from early investors, who saw returns of up to 19x, exacerbated the decline, with spot dumping identified as a key factor rather than a short squeeze.
Despite the crash, a whale accumulated nearly 30 million XPL worth $31.13 million, indicating potential support. However, speculative interest remained weak, with open interest dropping from $1.86 billion to $1.20 billion over five days, and leveraged bulls incurring about $10 million in liquidations. Technically, XPL found support near the $0.90-$1.00 Fibonacci retracement zone, but a break below could lead to further declines. Analysts suggest a rebound is possible if selling pressure subsides and FUD is addressed.
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