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This morning at 7 AM, the price of XPL showed a significant pullback, dropping from around $0.142 the previous night to $0.136, a decline of about 4.2%. It continued to weaken during the Asian trading session, accumulating a drop of nearly 3% within 24 hours. This period of decline is not an isolated incident, but rather a continuation of long-term structural issues with the Plasma project, compounded by external macroeconomic factors. Analysis shows that although the core pressure on XPL stems from internal supply and demand imbalances, the market panic triggered by Trump's latest tariff policy has indeed exacerbated its volatility, indirectly amplifying selling pressure.

Firstly, the intrinsic weaknesses of XPL are the dominant factors behind the decline. Since the mainnet launched in September 2025, the token has plummeted over 90% from its peak of $1.67, mainly due to the ongoing token unlocking mechanism and a decline in network activity. On January 25, 88890000 XPL (worth approximately $12 million) will be released, accounting for over 4% of the circulating supply. Such events historically trigger preemptive sell-offs, as seen when prices dropped 11% after the unlocking in November 2025.

Furthermore, the total value locked (TVL) of Plasma's stablecoin has plummeted 68% from its peak last October, with DEX trading volume dropping from $47 million to less than $10 million, leading to severe user outflow. The lack of staking incentives (extended to Q1 2026) and DeFi integration has resulted in insufficient utility for XPL, causing holders' confidence to wane. Around 7 AM, data from platforms like Binance showed that long positions were liquidated amounting to hundreds of thousands of dollars, reflecting panic selling by leveraged traders.

Secondly, Trump's tariff policy is indeed related to this decline.

Historical experience shows that Trump's tariff events (such as the 100% tariff on Iran in 2025) have previously triggered a 30% pullback in Bitcoin, intensifying selling by long-term holders (LTH).

As a mid-cap coin, XPL is more susceptible to broader market influences. The early morning decline coincided with the futures market opening, with trading volume surging fourfold, indicating a transmission of FUD (fear, uncertainty, doubt).

Overall, the morning's 70% drop in XPL is attributed to the project's weak fundamentals, with 30% influenced by market risk aversion triggered by Trump's tariffs. Without new positive developments (such as the launch of staking or a revival of stablecoin narratives), the price may continue to be pressured down to the support level of $0.12. Investors should be wary of the unlocking on January 25 and further geopolitical risks, and it is advisable to diversify holdings while watching macro dynamics.

@Plasma #plasma $XPL