A few weeks ago, chains associated with the stablecoin narrative were thriving but have since lost the flair. Plasma [XPL] was one of them, with their focus on stablecoin payment, which also featured Tether’s USDT.
XPL lost more than 12% of its total market capitalization in only 24 hours. A spike in daily trading volume by 38% confirmed the selling pressure.
Additionally, the coin’s turnover ratio of 0.436 indicates a significant portion of the capitalization was being traded. Can bulls step in as they did previously as the price approached a key demand zone?
XPL approaches a key demand zone
XPL price extended its decline for the second consecutive day to 18% following the day’s losses.
The current bear strength, as evident from the Bull Bear Power indicator whose bars were increasing in size, was pushing price toward the $0.08 zone.
As per the Market Structure Break and OB Probability indicator, the $0.08 was a key demand zone. Initially, XPL rebounded from this zone and pushed the price above $0.10.
Source: XPL/USDT on TradingView
While a decline to the $0.08 zone could trigger bulls into buying, bear strength was still very present. In fact, it increased with each candle close, with BBP at negative 0.0148.
This value was half of what the strongest bears in February had managed.
The decline made a potential rebound at $0.08 difficult with the current conditions. Probably, pessimism among traders and low chain activity amplified the losses.
XPL perpetual Futures traders at extreme pessimism
Looking at the perpetual Futures data for XPL, traders showed pessimism. The OI-Weighted Funding Rate sharply dropped into the negative territory, hitting 0.0437%.
The data showed that the market was overly crowded on the short side, an indication of panic selling. Furthermore, these shorts were paying longs to keep their positions open as well as opening more sell orders.
Source: CoinGlass
This sharp decline could mean further downside risk, especially if bulls did not step in. Breaking below $0.08 would create a new low for the altcoin, surpassing the current one at $0.0709.
Activity falls sharply in two weeks
XPL’s network activity was also following the price action. Over the past two weeks, the number of transactions dropped by more than 12%, from 416.5K to 365.9K.
But from a daily perspective, transactions rose by 4.28%, while total transaction fees were up 56%. This spike in activity was probably from the traders who were selling the token.
Source: Plasmascan
Meanwhile, its cumulative transaction count stood at 155.76 million at a speed of 4.5 TPS. Generally, most of XPL’s metrics were weak, including its price action, which was approaching a key demand zone.
Final Summary
- XPL loses 12% as the OI-Weighted Funding Rate turns red and activity drops sharply.
- XPL price was approaching the demand zone at $0.08, but the bearish strength was not relenting.
Source: https://ambcrypto.com/xpl-tests-0-08-demand-as-bears-press-hard-reversal-ahead/
