Mantra (OM) token price collapses by over 90% as fluctuating weekend liquidity levels exacerbate downside volatility

Mantra's recent token collapse highlights an issue within the crypto industry of fluctuating weekend liquidity levels creating additional downside volatility, which may have exacerbated the token's crash.

Mantra (OM) token’s price collapsed by over 90% on Sunday, April 13, recovering slightly to trade at around $0.53 by 11:30 UTC. The token had crashed from roughly $6.30 to below $0.50, triggering market manipulation allegations among disillusioned investors, as reported by Cointelegraph.

While blockchain analysts are still piecing together the events that led to the token’s collapse, the event highlights some crucial issues for the crypto industry, says Gracy Chen, CEO of cryptocurrency exchange Bitget.

“The OM token crash exposed several critical issues that we are seeing not just in OM, but also as an industry,” Chen said during Cointelegraph’s Chainreaction daily X show.

At least two wallets linked to Mantra investor Laser Digital were among 17 wallets that moved a combined 43.6 million OM tokens — worth about $227 million at the time — to exchanges before the crash, the blockchain analytics platform Lookonchain reported on April 13, citing Arkham Intelligence data.

However, Mantra CEO John Mullin has denied the allegations related to large-scale token transfers from Mantra investors, as reported by Cointelegraph on April 14.

Mantra released a post-crash statement on April 16, reiterating that the OM crash did not involve token sales by the project itself and that the Mantra team continues investigating the incident. The report did not explain the rapid movement of OM tokens to exchanges and subsequent liquidations.

Exchange movements point to strong ‘insider dumping’ signal

The rapid movement of such a large sum of tokens to exchanges during low-liquidity hours on Sunday pointed to a strong “insider dumping” signal, which may have exacerbated the token’s crash, according to a prominent crypto trader.

“It seems like they're setting up for a nice weekend pump and dump with no one around to notice or care,” the trader said in a post on X, formerly Twitter.

The trader added that the lack of weekend liquidity levels for Mantra tokens may have also contributed to the token’s swift price collapse.

Weekend liquidity issues have also impacted even major cryptocurrencies like Bitcoin (BTC).

The lack of weekend trading volume, combined with Bitcoin’s 24/7 liquidity, resulted in Bitcoin’s correction below $75,000 on Sunday, April 6, as reported by Cointelegraph.

The April 6 correction may have occurred due to Bitcoin being the only large tradable asset over the weekend available for de-risking amid global trade war concerns, said Lucas Outumuro, head of research at crypto intelligence platform IntoTheBlock.