Plasma [XPL] Takes a Dive After Airdrop Surge – Is the Hype Over for the ‘New Chain’?

Plasma's XPL token is experiencing a downturn following an initial surge due to airdrops. Key factors contributing to this decline include upcoming token unlocks, decreased trading activity, and a significant drop in stablecoin total value locked (TVL). As trading volumes and user engagement continue to wane, the market sentiment surrounding XPL appears increasingly bearish.

Key Takeaways

XPL's short-term outlook has been weakened by upcoming unlocks, decreasing activity, and a sharp drop in stablecoin TVL.
Metrics such as decentralized exchange (DEX) volume, daily users, and transaction counts have steadily declined throughout November, aligning with a bearish market trend.
Plasma's value fell by over 11% in just a few hours, while the broader market remained stable.
XPL’s recent performance resembles that of Starknet [STRK], which also experienced double-digit losses in the same period.
After initial excitement following an airdrop of approximately 10,000 XPL, price and on-chain activity have both cooled off, dampening momentum.

plasma xpl

What’s Behind the Decline of the Plasma Token?

The latest wave of selling pressure was primarily triggered by an upcoming token unlock scheduled for November 25. Approximately 88.88 million XPL tokens, worth around $18.13 million, are slated for unlocking, leaving over 80% of the total supply still locked. This event is significant as it represents the largest portion of about $80 million in weekly token unlocks across the entire cryptocurrency sector.

XPL Source: DefiLlama

In addition, overall long-term progress has faltered. The total value locked in stablecoins has dropped 68% since October, with a weekly decline of 8.24%. The market cap for stablecoins is currently around $1.82 billion, while the total TVL has decreased to $6.695 billion, with bridges accounting for $5.79 billion of this figure.

Source: Dune

Despite cumulative transactions reaching new highs, daily activity has lessened significantly. The transaction count fell from 42,398 to 39,725, while new daily users reached only 137, with returning users totaling 1,831. DEX volume has plummeted to $8.39 million at the time of reporting, down from a peak of $47.81 million on November 19. These usage metrics have been on a downward trend since late October, a pattern that is mirrored in the price charts.

Bears Maintain Control

On the charts, XPL's price indicates that the altcoin has entered a bearish phase, trading within a downward trend channel. Over the past five days, its price has dropped more than 36%. The Bull Bear Power (BBP) indicator has shown bearish dominance, and the net trading volume stands at a negative $5.07 million. Sellers appear to be gaining strength, with the next price target set at $0.15 if the current trend persists.

Conversely, a price movement above the upper resistance level could invalidate this bearish setup, suggesting a potential decline towards $0.15.

Plasma XPL Source: TradingView

Overall, the sentiment surrounding XPL remains predominantly bearish, with sellers gaining momentum, indicating the potential for further decline as on-chain activity mirrors the downward price trajectory. Nevertheless, a resurgence in buying activity could change the current outlook; however, the price has not yet shown any indications of such a reversal.