Plasma (XPL), a Layer-1 blockchain designed specifically for stablecoin payments and digital transfers, experienced significant volatility shortly after its public launch. Positioned as infrastructure for fast and efficient stablecoin transactions, the project attracted strong early attention due to its focus on payments and backing from notable industry investors. However, within days of its token generation event (TGE), XPL shifted from rapid expansion to a steep market correction.
When XPL became publicly tradable on September 25, market response was immediate. The token surged from its initial price of $0.10 to a peak of $1.68, marking a 1,500% increase in a short period. Presale participants reportedly saw returns of up to 19 times their initial investment. This sharp rise pushed Plasma’s market capitalization to approximately $3 billion at its peak, positioning it among the most talked-about new launches at the time.
However, momentum reversed quickly. Within four days of reaching its high, XPL declined by nearly 46%, falling below the $1.00 level. Market capitalization dropped from $3 billion to around $1.6 billion, significantly reducing early gains. The rapid shift highlighted the impact of supply dynamics and short-term speculative activity often seen following major token launches.
One key factor behind the correction was token unlock activity. At launch, approximately 8% of the total supply, equal to 800 million XPL, was unlocked to support ecosystem and decentralized finance development. Blockchain data indicated that roughly 600 million tokens were moved from project-linked wallets to exchanges during this period. Increased exchange supply often leads to heightened selling pressure, especially when early investors or liquidity providers seek to realize gains.
Market-making activity also increased around the time XPL reached its $1.68 peak. Reports suggested that daily average selling pressure reached approximately 4 million XPL during the decline phase. The timing of these flows aligned closely with the token’s top formation, contributing to downward momentum.
Despite the correction, accumulation activity from larger investors emerged during the dip. On-chain tracking showed that one large holder acquired nearly 30 million XPL, valued at over $31 million, within a three-day window. Such accumulation often signals long-term positioning, even when short-term sentiment weakens.
Derivatives data reflected cooling speculative interest. Open Interest fell from $1.86 billion to $1.20 billion within five days, indicating that leveraged positions were reduced as volatility increased. In addition, liquidation data showed that leveraged long traders faced notable losses during the sharp retracement, further dampening short-term momentum.
From a technical perspective, XPL retraced into the $0.90 to $1.00 range, which aligns with a key Fibonacci retracement zone. Historically, this level can act as support during corrective phases. Holding above this range may allow consolidation and potential stabilization, while a sustained break below it could open the door to additional downside pressure.
Overall, Plasma’s early price action reflects the typical lifecycle of high-profile token launches: rapid expansion driven by demand and limited circulating supply, followed by volatility as unlocks and liquidity flows reshape the market structure. Moving forward, recovery potential will likely depend on renewed capital inflows, ecosystem development progress, and sustained confidence in Plasma’s stablecoin-focused infrastructure model.