Plasma [XPL] Faces Decline After Airdrop Hype – Is the Excitement Fading?

Plasma [XPL] has been experiencing a downturn recently, driven by significant upcoming token unlocks, diminishing activity levels, and a notable drop in Total Value Locked (TVL) for stablecoins. As the initial excitement following its airdrop dissipates, XPL has struggled to maintain traction in the market.

Key Takeaways

Upcoming unlocks, decreased activity, and a sharp fall in stablecoin TVL have adversely affected XPL’s short-term outlook.
Metrics such as DEX volume, daily users, and transaction counts have consistently declined throughout November, reflecting a bearish technical trend.
Plasma's price has dropped over 11% in recent hours, even as the broader market showed gains for much of the day.
This decline aligns Plasma with Starknet [STRK], which also reported significant losses in the same timeframe.
After an initial surge driven by an airdrop of about 10,000 XPL for early users, XPL has continued to falter as interest waned and on-chain activity decreased.

plasma xpl

What’s Causing the Decline of the Plasma Token?

The initial wave of selling pressure was fueled by an upcoming token unlock on November 25th. Approximately 88.88 million XPL, worth around $18.13 million, was set to be unlocked, while over 80% of the total supply remained locked. This unlock represents the largest segment of roughly $80 million in weekly token unlocks across the cryptocurrency sector.

XPL Source: DefiLlama

In addition, long-term momentum appears to be faltering elsewhere. The Total Value Locked (TVL) in stablecoins has decreased by 68% since October, with a weekly drop of 8.24%. Currently, the stablecoin market cap is around $1.82 billion, while the overall TVL stands at $6.695 billion, with bridges accounting for $5.79 billion of this total.

Source: Dune

While cumulative transactions hit a new peak, daily engagement has weakened. The transaction count fell from 42,398 to 39,725, with daily new users at just 137 and returning users numbering 1,831. DEX volume dropped to $8.39 million at the time of reporting, down from a high of $47.81 million on November 19th. Most usage metrics have declined since late October, which is further reflected in the price trends.

Bears Maintain Control

Chart analysis reveals that the XPL price is in a bearish formation, operating within a downward trend channel. The token has experienced a drop of over 36% in the last five days alone.

The Bull Bear Power (BBP) has tilted heavily in favor of bears during this period, with a negative net volume of $5.07 million. The bearish sentiment suggests that if current trends persist, XPL could target the $0.15 level.

Conversely, a breach above the upper resistance line could negate this bearish scenario, indicating a possible rise instead.

Plasma XPL Source: TradingView

Overall, XPL appears to be largely in a bearish phase, with selling pressure gaining strength. This suggests a potential further decline, as on-chain activity follows a similar pattern to the falling price. A surge in bullish activity could alter this direction, but no such signs have yet emerged.