MANTRA (OM) Token Collapse Leaves Investors with 90% Losses

The collapse of the MANTRA (OM) token has left investors reeling, with many facing significant losses. As analysts comb through the causes of the collapse, many questions remain. The token's downfall has raised concerns about the risks associated with investing in cryptocurrencies and the importance of due diligence.

Industry experts have identified five critical red flags behind MANTRA’s downfall, revealing strategies investors can adopt to steer clear of similar pitfalls in the future. The collapse of OM, which saw a 90% crash, has been attributed to several factors, including changes in tokenomics, unusual price action, and discrepancies in project fundamentals.

One of the key issues highlighted by analysts was the change in OM’s tokenomics. In 2024, the project doubled its token supply to 1.77 billion and shifted to an inflationary model, which diluted its original holders. This move was seen as a point of concern, as it favored insiders and led to a low circulating supply, fueling hype and price manipulation. The team’s control over the OM supply also raised centralization concerns, with about 90% of OM tokens held by the team, indicating a high level of centralization that could potentially lead to manipulation.

Another red flag was the unusual price action of OM. Despite the broader market experiencing steep losses, OM’s price action was relatively stable until the latest crash. This stability was seen as a clear sign of a potential issue or problem with the project. Investors lacking technical analysis knowledge would have easily missed these signs, ultimately leading to the crash.

Experts also highlighted major discrepancies in MANTRA’s total value locked (TVL). The token’s fully diluted valuation (FDV) reached $9.5 billion, while its TVL was only $13 million, indicating a potential overvaluation. The airdrop was also criticized for disproportionately favoring insiders while excluding genuine supporters, reflecting a lack of fairness. The team’s alleged associations with questionable entities and ties to questionable initial coin offerings (ICOs) also raised doubts about the project’s credibility.

Whale movements were another warning sign. Before the crash, a whale wallet reportedly associated with the MANTRA team deposited 3.9 million OM tokens into an exchange. Large OM transfers to exchanges days prior were a major warning of potential sell-offs. Investors should pay close attention to such large transfers, which often act as warning signals. Analysts also outlined what investors should look out for, including transfers into exchanges and the potential for increasing price volatility.

The involvement of centralized exchanges (CEXs) in OM’s crash remains debatable. Some experts claimed that CEX liquidations during low-liquidity hours worsened the crash by triggering cascading sell-offs. However, others argued that the crash was not caused by liquidations or forced closures, but rather by traders and investors increasing their short positions as the price fell.

To protect themselves from similar collapses, investors can adopt several strategies. These include diversifying investments, setting stop-loss triggers, using perpetual futures as a risk management tool, and focusing on a token’s liquidity. Investors should also verify the project team’s credentials, review the project roadmap, and monitor on-chain activity to ensure transparency. Additionally, investors can limit leverage, choose platforms with transparent risk policies, monitor open interest for liquidation risks, and hold tokens in self-custody wallets to reduce CEX exposure.

The MANTRA (OM) collapse serves as a powerful reminder of the importance of due diligence and risk management in cryptocurrency investments. By carefully assessing tokenomics, monitoring on-chain data, and diversifying investments, investors can minimize the risk of falling into similar traps. With expert insights, these strategies will help guide investors toward smarter, more secure decisions in the crypto market.