Why Mantra’s OM Token Experienced a 90% Crash: A Look into the Market Forces at Play

Andrew Chen
MANTRA

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Mantra’s OM token collapsed spectacularly—dropping 90% in mere minutes from $6.32 to just $0.49. While the headlines shouted price action, the real story runs deeper: OM’s crash didn’t just expose one project’s vulnerability, but a broader truth about liquidity in crypto markets.

According to Mantra co-founder John Patrick Mullin, the crash stemmed from “massive forced liquidations” by centralized exchanges (CEXs) like Bybit and Binance. These liquidations were triggered during low-liquidity hours, catching large OM holders off guard. “Reckless forced closures,” Mullin called them, accusing exchanges of acting without warning.

But beneath the drama, the event exposed a systemic flaw—an illiquid market, overly reliant on leverage, with too few buyers to absorb sudden sell pressure.

What Is Mantra?

Mantra is a decentralized finance (DeFi) platform and layer-1 blockchain focused on real-world asset (RWA) tokenization. Built on Cosmos SDK, it promises scalable, interoperable infrastructure for institutions to issue tokenized assets—from real estate to bonds.

OM, the network’s native utility token, powers staking, governance, and transaction fees. By April 2025, Mantra had become especially active in the MENA region, working to integrate compliant financial instruments on-chain.

Leverage Meets Illiquidity

While OM had a compelling narrative and institutional partnerships, it also had a thin market structure. Some holders used leverage—borrowing to amplify gains. But when OM’s price started falling, exchanges moved fast to liquidate positions, triggering a massive sell-off.

Bybit alone reportedly liquidated $71 million in OM. On-chain data revealed that 43.6 million OM tokens—worth $227 million pre-crash—were moved to exchanges just before the drop. The timing led to speculation of coordinated dumping, though entities like Shorooq Partners and Laser Digital denied involvement.

Why Liquidity Matters in Crypto

In a liquid market, assets can be bought or sold without drastically moving the price. But OM had too few active buyers. When liquidation bots flooded the market with sell orders, there weren’t enough counterparties to absorb them—setting off a liquidity death spiral.

This situation isn’t unique to OM. Crypto markets often suffer from:

  • Concentrated holdings: A few wallets holding too much supply.
  • Low trading volume: Especially during off-hours.
  • Insufficient market makers: Leading to wide bid-ask spreads.
  • High leverage: Which creates the risk of cascading liquidations.

When these elements combine, even strong projects can collapse under pressure.

Mullin has since issued a public statement thanking the community and reaffirming Mantra’s commitment. A full post-mortem is expected within 24 hours. The team also announced plans for a token buyback and burn to stabilize the market and regain trust.

While OM is “down, but certainly not out,” according to Mullin, the event has shaken confidence. Mantra now faces the challenge of rebuilding credibility while addressing structural issues that allowed the collapse.

Also Read: Mantra (OM) Token Wipeout Triggers Red Alert for Pi Network Mainnet Plans – Analyst

The OM crash is a stark reminder: technology and vision are not enough. Without deep liquidity, proper risk management, and transparent governance, even promising tokens remain fragile.

As investors seek safer exposure in a volatile space, Mantra’s fall may push the industry toward more sustainable, liquid, and resilient market structures.

Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.

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