Tether USDT/USD-backed stablecoin blockchain Plasma XPL/USD has retraced by over 33%, following its 100% price increase after the token launch on Sept. 25.
What Happened: Economist Alex Kruger explained that a ~40% drop over two days was driven by profit-taking from recently unlocked non-U.S. initial coin offering participants, with abnormally high funding pointing to continued spot selling.
Once this eases, a strong upward move is expected.
Trader Altcoin Sherpa noted relentless selling with little rebound, taking a loss on perpetuals but holding spot XPL and targeting $1 as a buy zone.
They cautioned that "catching falling knives" is risky, as momentum and supply control often outweigh fundamentals.
Trader Lord Durden highlighted that calling a "generational bottom" too early can be misleading.
Key bullish triggers include support reclaims, retests, and a 4-hour downtrend breakout.
Daily support at $1.11 is crucial, with further levels noted if price falls.
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Why It Matters: Aave's deposits on the Plasma chain exceeded $6.5 billion since mainnet launch, making it the second-largest Aave deployment within a week.
On Sept. 25, Plasma launched its XPL token, introducing a digital bank, Plasma One, and distributing 25 million tokens to pre-depositors, regardless of their investment size.
The distribution strategy assures broad and aligned ownership.
Despite the short-term drop, traders see Plasma as one of the few ways to gain direct stablecoin exposure in 2025, suggesting the project could be well-positioned for the coming year.
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