14.04.2025 15:21
The unexpected collapse of OM token, the local cryptocurrency of Mantra, followed by a 200% rise, has caught the attention of investors. While allegations of "rug pulls" against the project team and LUNA-like scenarios are being discussed, experts are advising caution against the risk of a new decline.
This week in the crypto market, the volatile price movements of Mantra (OM) stood out. The token experienced a nearly 90% loss in value over the weekend due to allegations against the project team, but subsequently made a rapid recovery. Investors remain cautious about potential risks in the future.
Mantra (OM) Price Rises After Collapse
Despite the harsh allegations leading up to the collapse, Mantra's OM token recorded an unexpected recovery following the sharp decline it experienced over the weekend. The token price rose from $0.37 to $1.10 as of April 14, marking an increase of around 200%. Allegations of fraud, referred to as "rug pulls" in the community, and rumors that a large portion of the token supply is controlled by the team were among the main reasons for this rapid decline.
JP Mullin, co-founder of Mantra, attempted to calm the community by stating that the team had not abandoned the project. Mullin expressed that the official Telegram group is "still online" and that they have not gone anywhere. Sharing a verification address as proof of OM token assets, Mullin argued that the collapse was due to "reckless forced liquidation actions by some centralized exchanges." Accordingly, OM tokens used as collateral for high-risk loans were rapidly liquidated due to market volatility and decreasing collateral values.
Centralized exchanges can change credit risk parameters in market volatility to prevent potential bankruptcies. Platforms like OKX (centralized exchange) are reported to have applied different criteria since Mantra's tokenomic update in October 2024. This update particularly included increasing the OM token supply from 888,888,888 to 1,777,777,777 and transitioning from an annual 8% inflation cap to unlimited inflation.
OKX CEO Star Xu described Mantra as "a major scandal" and stated that he would release more reports on the background of the collapse. However, the rapid recovery in the OM token price also raises concerns about a "bull trap" in the crypto market. The temporary rises seen in Terra's LUNA in May 2022, followed by a permanent decline, signal a similar risk for OM according to many analysts.
Analysts suggest that for the OM token to recover in the long term, the team needs to increase transparency and rebuild the project's credibility. Otherwise, they warn that temporary price spikes will not prevent a new downward cycle.