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The OM token of Mantra experienced a turbulent weekend, crashing by over 90% before achieving a spectacular rebound of 200%. The token’s price, which had hit a low of 0.37 dollars, climbed back up to 1.10 dollars on April 14. However, behind this recovery lies a complex story, full of accusations, suspicions, and market dynamics that closely resemble the collapse of Terra (LUNA) in May 2022.
“` The accusations of rug pull and the response from the Mantra team
The collapse of the OM token has triggered a flurry of accusations on social media, with many users openly discussing a possible rug pull, which is a scam where the creators of a project suddenly abandon it, taking away investors’ funds. The rumors have become more persistent after reports emerged of suspicious transfers of OM tokens to centralized exchanges, just before the collapse of the crypto Mantra (OM).
To calm the waters, JP Mullin, co-founder of Mantra, intervened to try to reassure the community. In a message on the project’s official Telegram channel, Mullin stated:
“We are here and we are not going anywhere”,
emphasizing that the group is still active. He also shared a verification address to demonstrate the holdings in OM tokens by the team.
According to Mullin, the crash was not caused by a scam, but by “irresponsible forced closures” by centralized exchanges, which would have triggered a chain reaction in the market.
A collapse of billions and massive liquidations
Despite the recovery, the damages were significant. In just one day, the market capitalization of OM lost over 5 billion dollars, while the liquidated futures positions reached 75.9 million dollars. A very hard blow for the investors and for the credibility of the project.
Some analysts have raised further doubts about the management of the token. In particular, the analyst known as Ed claimed that the Mantra team had used their OM tokens as collateral to obtain high-risk loans on a centralized exchange. A sudden change in the risk parameters of the loans would then have triggered a margin call, contributing to the price collapse.
The changes to the tokenomics and the intervention of OKX
A key element in the story is represented by the changes to the tokenomics of OM that occurred in October 2024. On that occasion, Mantra doubled the total supply of tokens, increasing from 888,888,888 to 1,777,777,777 units. Furthermore, the limited supply model was abandoned in favor of an inflationary one, with an initial inflation rate of 8% per year.
These changes have prompted exchanges like OKX to review their risk parameters for loans, in an attempt to protect themselves from volatility and potential defaults. The CEO of OKX, Star Xu, described Mantra as “a huge scandal” and announced the publication of detailed reports on the incident in the coming days.
A rebound that recalls the LUNA case
Despite the 200% rebound, many experts warn against excessive optimism. The structure of OM’s recovery closely resembles that of LUNA, which, after the 2022 crash, experienced a brief recovery before plummeting further.
Currently, the price of OM is below the 50-week exponential moving average (EMA), which is around 3.25 dollars, and is testing the resistance of the 200-week EMA, located at approximately 1.08 dollars. Additionally, the weekly relative strength index (RSI) has dropped to 33.31, indicating a weakening momentum and increasing the risk of a new bear collapse.
Analysts remain skeptical
The similarity with the dynamics of LUNA has not gone unnoticed. The analyst AmiCatCrypto pointed out that, despite the rally, OM could lose 90% of its value in a single day, as has happened in the past. “If you ask me if the bull market is over, the answer is: YES,” the expert wrote.
The general sentiment remains therefore marked by caution. The rebound of OM could be just a bull trap, meaning a false signal of recovery destined to precede a new collapse.
A crisis of confidence for Mantra
The OM affair represents a severe blow to Mantra’s reputation and raises broader questions about transparency and risk management in crypto projects. The concentration of 90% of the token supply in the hands of the team, combined with controversial decisions such as increasing the supply and adopting an inflationary model, has fueled distrust among investors and analysts.
In the short term, much will depend on the ability of the Mantra team to provide concrete evidence of their good faith and to implement measures that can restore trust in the project. But the market, as we know, has a long memory and short patience.
Conclusion: rebound or illusion?
The OM case is emblematic of the challenges that the world of criptovalute continues to face: extreme volatility, lack of regulation, and systemic risks linked to the centralized management of projects. The rebound of the token could offer a short-term opportunity for some traders, but for long-term investors, the warning signs are numerous.
The story of OM is still unfolding, but one thing is certain: trust, once lost, is difficult to regain.
