The value of Mantra’s OM token saw a dramatic turnaround after its steep decline over the weekend, although market experts caution that this rebound might not last, drawing parallels to the preliminary phases of the Terra LUNA crash in 2022. On April 13, the OM token experienced a freefall from $6.30 to under $0.50 in a matter of hours, erasing more than 90% of its $6 billion market valuation. This sell-off led to liquidations exceeding $75 million in OM futures.
As the market descended into chaos, rumors of a potential scam started to surface, with concerns being raised about dubious token transfers and the project’s controversial economic model. The Mantra team swiftly addressed these fears. Co-founder JP Mullin reassured the community in the project’s Telegram group that the team was committed for the long haul. He attributed the drastic price drop to “reckless forced closures initiated by centralized exchanges,” dismissing any misconduct by the project. Mullin also shared a verification address to demonstrate the team’s token holdings.
This move managed to quell some of the panic, with OM’s value recovering nearly 200% from its lowest point of $0.37 to as much as $1.10 on April 14. However, this rebound has not done much to alleviate widespread skepticism.
Despite the recent recovery, OM’s technical indicators suggest troubling times ahead. The token is currently struggling to overcome significant resistance levels and remains well below its 50-week exponential moving average near $3.25, now facing resistance at the 200-week EMA around $1.08. The weekly relative strength index has dropped to 33.31, indicating a continued weak market momentum.
Critics argue that Mantra’s core team allegedly holds about 90% of the token supply and has been using their OM holdings as collateral for high-risk loans. A sudden alteration in loan risk parameters by centralized exchanges led to a margin call, further exacerbating the token’s decline.
Analysis of blockchain data has revealed significant whale activity and concentrated sell-offs, contributing to the sudden price crash. Notably, whales transferred 14.27 million OM to the OKX exchange just days before the crash. These entities had previously acquired over 84 million OM in March for $564.7 million, but following the crash, their holdings’ value plummeted to just $62 million.
Despite the price recovery, the underlying structural issues have yet to be addressed, leaving the market on edge about the possibility of another collapse.
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