Mantra's OM token dropped drastically overnight, surprising investors and the cryptocurrency industry. The price fell from $6.30 to $0.70 in hours, wiping out billions in market capitalization and causing large liquidations.
The crisis started on Sunday during low liquidity hours. Large investors transferred large amounts of OM tokens to exchanges before the decline, indicating a deliberate sell-off. This action triggered panic selling, resulting in a fast drop. Mantra's team denied responsibility, citing the aggressive liquidations on controlled exchanges. On-chain data revealed anomalous deposit and withdrawal trends before the crisis. These movements most likely increased the downward pressure.
Analysts point out that fast token transfers by whale accounts might erode confidence and cause disproportionate decreases. Glassnode's investigation revealed that the price reduction was caused by reactionary trading activity rather than large fund inflows.
The episode shows the volatility of crypto markets and the impact of large-scale investor activity. It serves as a sharp warning of the perils of investing in digital assets, as well as the need for market liquidity.
