Mantra Token Plunge Highlights Liquidity Vulnerabilities and Potential Market Manipulation

The recent sharp decline in Mantra’s token value has brought to light significant liquidity risks within the cryptocurrency market, raising concerns about potential manipulation. Market analysts point to erratic trading volumes and sudden price swings as indicators of underlying vulnerabilities. This event underscores the importance of robust liquidity mechanisms and regulatory oversight to protect investors in the volatile digital asset space. Experts warn that similar incidents may occur across other mid-cap tokens unless exchanges implement stricter safeguards and transparency measures.

In simple terms, there were no buyers to absorb the selling pressure, which exacerbated the collapse. What made the crash even worse were the subsequent liquidations of long positions. These liquidations amounted to $21 million on OKX alone, placing further selling pressure on the market.

Did insiders dump their Mantra tokens?

While the exact cause remains uncertain, Kaiko points out that one potential explanation is large insider sales. Moreover, several independent investigators share this view. One blockchain investigator, Max Brown, claims that the team controlled 90% of the token supply to artificially boost the token’s availability.

OddEyeResearch also claimed that the crash resulted from an attempt at market manipulation. They pointed to large movements from CEXs to unidentified wallets and back, which they believe are actually Mantra’s wallets.

1/ The @MANTRA_Chain Foundation asserts that it was completely unrelated to the recent sell-off of $OM tokens, yet we suspect them of engaging in a market manipulative collusion, and the sell-off was caused by a small ’betrayal’ by a group member.

Here’s our investigation. pic.twitter.com/2BT35n30i6

The crash came, according to OddEyeResearch, when one group member “betrayed” the scheme. They added that this could have been either a result of a voluntary sale or of forced liquidations. In any case, the subsequent crash under low liquidity conditions prompted others to panic sell.

In particular, forced CEX liquidations are what Mantra CEO JP Mullin blamed for the crash. However, because exchange transactions are not easily visible on-chain, investigators can’t independently verify what happened.

In either case, Mantra has so far not come anywhere close to recovering its value. On April 15, OM was still trading at $0.8213, somewhat recovering from its $0.4823 low the day prior. However, OM is roughly 90% below its high of $7.09 last week.

(OM)