17th April

Mantra's OM token crash dominates headlines amid broader market volatility

You can read last week's “This week in crypto” here.

On 13th April, the cryptocurrency world was rocked as Mantra's OM token experienced a dramatic 90% drop in value within a single day, falling from over $6 to approximately $0.45. This sudden collapse wiped out more than $5.4 billion in market capitalisation, raising concerns about the stability of real-world asset (RWA) tokenisation projects. ​

Mantra's co-founder, JP Mullin, attributed the crash to "reckless forced closures initiated by centralised exchanges on OM account holders," suggesting that these actions triggered a cascade of liquidations. However, on-chain data revealed that 17 wallets had deposited 43.6 million OM tokens, worth $227 million, into exchanges prior to the crash. Some of these wallets were linked to prominent investors, including Laser Digital and Shorooq Partners, though both firms denied involvement in the sell-off. ​

The incident has drawn comparisons to the 2022 Terra/LUNA collapse, with critics questioning OM token holdings' concentration and Mantra's operations' transparency. Despite the turmoil, Mullin assured the community that the project remains active and committed to addressing the issues that led to the crash. ​

Following the steep decline, OM's price saw a significant rebound, surging nearly 200% to reach $1.10 on 14th April. This recovery was bolstered by Mantra's announcement of a comprehensive recovery plan, which includes a token buyback and burn programme aimed at reducing supply and stabilising the token's value. The project also plans to utilise its $109 million ecosystem fund to support these initiatives. ​

Despite the rebound, analysts caution that the surge may represent a "dead cat bounce," a temporary recovery before further declines. Concerns persist regarding the project's governance and the potential for future volatility. ​

Interestingly, while OM's price plummeted, the total value locked (TVL) in the Mantra protocol increased by over 500%, reaching a yearly high of 4.21 million OM (approximately $3.24 million). This suggests that some investors viewed the price drop as a buying opportunity, locking in tokens to earn yields or participate in the network. ​

However, analysts warn that this behaviour could be indicative of speculative trading rather than a genuine vote of confidence in the project's fundamentals. The rapid influx of capital during a period of extreme volatility raises questions about the sustainability of such growth.​

The Mantra incident occurred amid a period of increased volatility in the broader cryptocurrency market. Bitcoin experienced a sharp decline, falling from $77,000 to $72,000, before recovering to around $76,000. Ethereum and other major altcoins mirrored this pattern, reflecting the market's sensitivity to macroeconomic factors and investor sentiment. ​

Analysts attribute the turbulence to a combination of factors, including ongoing regulatory uncertainties, shifts in monetary policy, and the psychological impact of high-profile token collapses like that of OM. The incident has prompted calls for greater transparency and risk management within the crypto ecosystem.​

In other developments, a new cryptocurrency aims to occupy the final frontier of investor safety — cash that doesn't lose purchasing power to inflation. USDi, launched by two veterans of US inflation-protected and foreign-exchange derivatives, is a dollar-tracking stablecoin whose value is determined by the US consumer price index increase since December 2024. On April 15, it was $1.00863.

This innovation represents a significant step in the evolution of stablecoins, offering investors a tool to preserve purchasing power in the face of inflation. As the crypto market continues to mature, such developments highlight the ongoing efforts to bridge the gap between traditional finance and digital assets.

The OM token crash serves as a stark reminder of the risks inherent in the cryptocurrency market, particularly within emerging sectors like RWA tokenisation. As Mantra works to implement its recovery plan and restore investor confidence, the broader crypto community faces the challenge of ensuring transparency, accountability, and resilience in the face of adversity.​

Investors are advised to conduct thorough due diligence, remain vigilant for signs of market manipulation, and consider the long-term viability of projects before committing capital. The events of the past week underscore the importance of robust governance structures and the need for regulatory frameworks that protect participants without stifling innovation.​

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