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Plasma [$XPL] registered a daily price surge of 24.18% as investors positioned around a massive token unlock, as a large team transfer intensified supply risks.
Notably the rally arrived as Plasma planned to unlock around 1.76 billion $XPL valued roughly $160 million, representing 63.2% of the total circulating supply.
Besides, another large transaction however complicated the market setup surrounding the unlock. In particular, Plasma Team moved 300 million $XPL, worth roughly $33.07 million, to an unknown new wallet.
This transaction created another supply consideration as $XPL price continued pushing higher. Buyers however absorbed the uncertainty and pushed the price upwards instead of retreating.
This reaction hence suggested market participants had increasingly positioned ahead of the unlock rather than waiting for its completion.
Leverage piled into $XPL’s rally
On the derivatives market, traders expanded their exposure considerably as $XPL extended its price increase. The derivatives trading volume increased 182.78% to $744.47 million during the trading session.
Additionally, the token’s Open Interest also saw an increase of 52.16% to $302.60 million. The expansion implied $XPL’s market participants added fresh positions instead of simply closing the existing exposure.
Besides, the Binance top traders meanwhile maintained a clear long bias with the longs representing 61.47%, compared with 38.53% short positions, producing a Long/Short Ratio of 1.60.
The leveraged positioning therefore increasingly supported another upside price continuation despite the approaching supply pressure.
Even so, this increasing leverage also raised volatility to sudden price swings because a sudden price reversal could force crowded positions to unwind faster.
In fact this volatility concern became increasingly relevant as $XPL price pushed toward a technically crucial area following its rapid rally.
Can $XPL clear the supply zone?
On the 24-hour timeframe charts, $XPL price pushed through the $0.11304-resistance to trade around $0.11904 at the time of writing.
Notably, the recent price expansion placed the token inside the marked daily fair value gap.
Also, the move represented a notable structural improvement after earlier rebounds repeatedly struggled around the $0.11304-level. The token then pushed deeper into the overhead supply zone.
The zone however expanded towards the $0.125-price mark, leaving the bulls with another barrier before a broader continuation.
Meanwhile, the Stoch RSI also entered the overbought condition during the price rally with its two lines reaching 85.15 and 82.51. This reflected an increasingly stretched short-term condition.
However, the overbought readings alone would not confirm an immediate retreat as the price held the breakout. Rather, the $0.11304- price level would become significant in case of a price retracement.
Notably, the Parabolic SAR indicator had also flipped beneath the $XPL price suggesting the bulls were still in control even after the rapid price move.
Strongly maintaining $0.11304- price level could protect the bullish structure and reopen a move through the supply zone toward $0.14000.
Lower liquidity threatens leveraged longs
However despite bullish positioning, the Binance Liquidation Heatmap suggested a downside possible risk beneath $XPL’s prevailing market value.
Notably, liquidation clusters accumulated beneath the price, around the $0.105 to $0.100-region. These liquidity clusters could likely pull the price in case of a deeper retracement.
More importantly, Plasma’s rising leverage, especially the Open Interest, made those downside pools more relevant. Therefore, losing the $0.11304 level could pressure the established leveraged longs.
Consequently, this weakness could expose the $0.10185 level before deeper liquidity became accessible, with support around $0.08905.
$XPL buyers however could undermine this pullback scenario by protecting the $0.11304-zone and clearing the overhead supply zone. The outcome would leave the lower the liquidity concentration ungrabbed while keeping $0.1400 within reach.
Final Summary
- $XPL buyers absorbed unlock concerns as rising derivatives activity supported the 24% rally.
- Liquidity below price raised pullback risk as $XPL pushed deeper into overhead supply.