Illiquidity in crypto means there aren’t enough people buying or selling a token at any given time, making the market fragile. One large move can trigger a cascade, especially if buyers disappear. When trading activity is low, even a normal sell-off can cause the price to collapse—not because the project failed but because the market could not handle the pressure.
Illiquidity is the opposite of liquidity, in which traders can exchange assets easily without major price swings.
On April 13, 2025, Mantra’s OM token crashed fast—dropping 90% in minutes. It fell from around $6.32 to as low as $0.49.
Mantra co-founder John Patrick Mullin said the cause was due to “massive forced liquidations” of large OM holders. He called the actions “reckless forced closures” by centralized exchanges (CEXs), stating they liquidated OM positions without warning during low-liquidity hours.
But was this just one bad day? The OM crash might have revealed how thin the market was.
This article explores the connection between the Mantra (OM) crash and illiquidity, why liquidity plays a crucial role in crypto markets and the key lessons this event reveals.
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