Mantra OM Token Crash Highlights Critical Liquidity Issues in Crypto

The collapse of the Mantra (OM) token, which fell by over 90%, highlights critical liquidity concerns in the crypto market. Analyst Gracy Chen from Bitget identifies wealth concentration and low weekend liquidity as major factors. Despite allegations of market manipulation related to significant wallet transfers, Mantra’s CEO denied any large-scale token sales. The situation raises concerns about governance and liquidity issues affecting multiple cryptocurrencies.

The recent crash of the Mantra (OM) token, which plummeted over 90% from approximately $6.30 to below $0.50, reveals significant liquidity concerns within the cryptocurrency market. Analysts suggest that fluctuating liquidity levels during weekends intensify downside volatility, potentially contributing to the sharp decline in the token’s value. Allegations of market manipulation have emerged from disillusioned investors following this drastic change in price, according to Cointelegraph.

Gracy Chen, CEO of Bitget, emphasised that the OM crash underscores multiple critical issues affecting the entire crypto landscape. She noted that wealth concentration, opaque governance, sudden capital flows, and liquidations during low trading volumes collectively precipitated the drastic price drop. Chen’s comments were made during an episode of Cointelegraph’s Chainreaction daily X show.

On April 13, blockchain analytics firm Lookonchain reported that at least two wallets associated with Mantra investor Laser Digital transferred a combined total of 43.6 million OM tokens—valued at around $227 million—prior to the crash. Despite this, Mantra CEO John Mullin denied claims of large-scale token sales by investors just before the collapse, insisting systematic investigation was ongoing.

In the wake of the crash, the Mantra team released a statement clarifying that the incident was not linked to project token sales. Nevertheless, many questioned the sudden outflow of OM tokens leading to significant liquidations on trading platforms. Mullin later attributed the crash to forced liquidations occurring on central exchanges during periods of low liquidity, identifying concerns with one specific exchange, distinct from Binance.

Reports indicate that significant transfers of OM tokens to various exchanges raised suspicions of insider trading. Chen expressed concern about the implications of these outflows, which she characterised as indicative of insider dumping. Furthermore, the weekend liquidity issues have similarly affected major cryptocurrencies like Bitcoin (BTC), with a noted price correction due to insufficient trading volume during weekends, demonstrating the broader ramifications of liquidity challenges in the crypto market.