The OM token of Mantra (OM) underwent a significant rebound after experiencing a 90% drop over the weekend, following proactive measures from the project’s team in response to accusations of a rug pull scam.
OM surges 200% as co-founder addresses issues
As of April 14, OM was priced as high as $1.10, reflecting nearly a 200% increase from its post-crash low of $0.37 just a day earlier.
OM/USDT daily price chart. Source: TradingView
The rebound was triggered after Mantra addressed the escalating accusations of a rug pull.
Co-founder JP Mullin assured the community that the project is still operational, noting that the official Telegram group is “still online.”
“We are present and not going anywhere,” Mullin stated, also providing a verification address to validate the team’s OM token holdings. He ascribed OM’s decline to “irresponsible forced liquidations initiated by centralized exchanges.”
Source: JP Mullin
This reassurance helped to alleviate the panic selling of the OM token, which had wiped out over $5 billion in market value and liquidated $75.88 million worth of futures contracts in just one day.
Several online commentators suggested that the Mantra team, which reportedly holds 90% of the token supply, engineered the sell-off due to suspicious OM transfers to centralized exchanges immediately before the crash.
Source: AltcoinGordon
Analyst Ed further accused the Mantra team of using their OM holdings as collateral to obtain high-risk loans on a centralized exchange.
He pointed out that a sudden shift in the platform’s loan risk settings led to a margin call, exacerbating the token’s sharp decline.
Source: Ed
Exchanges modify loan risk parameters to handle market fluctuations and shield themselves from potential insolvency due to declining collateral values. Centralized platforms like OKX have revised their parameters following Mantra’s tokenomics adjustment in October 2024.
Notably, in that month, Mantra doubled its total supply of OM tokens from 888,888,888 to 1,777,777,777. It also shifted from a capped to an uncapped, inflationary structure with an initial annual inflation rate of 8%.
Source: Wu Blockchain
OKX CEO Star Xu claimed that Mantra is a “major scandal,” announcing that it would provide pertinent reports regarding its crash in upcoming days.
OM rebound may mimic LUNA’s bull trap
OM’s 200% recovery from its $0.37 low might appear striking, but its pattern closely resembles the traditional bull trap observed in Terra’s LUNA incident back in May 2022.
OM’s price has plummeted below the 50-week exponential moving average (50-week EMA; the red wave) support at approximately $3.25 and is now encountering resistance at the 200-week EMA (the blue wave) around $1.08.
OM/USDT weekly price chart. Source: TradingView
Simultaneously, OM’s weekly relative strength index (RSI) has decreased to 33.31, indicating a weakening momentum and a heightened risk of another drop.
Related: What is a rug pull in crypto and 6 ways to identify it?
This setup closely resembles LUNA’s post-crash dynamics. After its steep decline in May 2022, the price saw a brief recovery but could not return to its 50-week and 200-week moving averages, setting off a deeper and more extended downtrend.
LUNA/USD weekly price chart. Source: TradingView
Similar to LUNA, OM currently encounters rising skepticism despite the temporary rebound, with analyst AmiCatCrypto predicting that the Mantra token could drop 90% within a single day after a 100-day rally.
“If you were to ask me if the bull market is finished. Brief answer. YES,” she remarked, adding:
“Any profits from this point onwards are considered bounces.”
This article does not provide investment advice or recommendations. Every investment and trading action carries risks, and readers should perform their own due diligence before making a choice.
