Mantra’s OM (OM) token staged a sharp rebound after plunging 90% over the weekend, following an active response from the project’s team addressing allegations of a rug pull scam.
OM bounces 200% as co-founder addresses concerns
As of April 14, OM was trading for as high as $1.10, almost 200% higher when compared to its post-crash low of $0.37 a day prior.
The rebound came after Mantra addressed mounting rug-pull allegations.
Co-founder JP Mullin reassured the community that the project remains active, pointing to the official Telegram group being “still online.”
“We are here and not going anywhere,” Mullin wrote, also sharing a verification address to prove the team’s OM token holdings. He attributed the OM’s crash to “reckless forced closures initiated by centralized exchanges.”
The assurance calmed the OM token sell-off that had obliterated over $5 billion in market capitalization and liquidated $75.88 million worth of futures positions in a day.
Numerous online commentators claimed the Mantra team, reportedly controlling 90% of the token supply, orchestrated the sell-off due to suspicious OM transfers to centralized exchanges right before the crash.
Analyst Ed further alleged that the Mantra team used their OM holdings as collateral to secure high-risk loans on a centralized exchange.
He noted that a sudden change in the platform’s loan risk parameters triggered a margin call, contributing to the token’s sharp decline.
Exchanges adjust loan risk parameters to manage market volatility and protect themselves from potential insolvency due to falling collateral values. Centralized exchanges like OKX have changed their parameters after Mantra’s tokenomics update in October 2024.
Notably, Mantra doubled the total supply of OM tokens from 888,888,888 to 1,777,777,777 in the said month. It further transitioned from a capped to an uncapped, inflationary model with an initial 8% annual inflation rate.
OKX CEO Star Xu called Mantra a “big scandal,” adding that it would release relevant reports regarding its crash in the coming days.
OM bounce might resemble LUNA’s bull trap
OM’s 200% rebound from its $0.37 low may look impressive, but its structure closely resembles the classic bull trap pattern seen in Terra’s LUNA debacle in May 2022.
OM’s price has crashed below the 50-week exponential moving average (50-week EMA; the red wave) support near $3.25 and is now testing resistance at the 200-week EMA (the blue wave) at around $1.08.
Meanwhile, OM’s weekly relative strength index (RSI) has dropped to 33.31, signaling weakening momentum and increasing the risk of another breakdown.
This setup strongly mirrors LUNA’s post-crash behavior. After its sharp decline in May 2022, the price staged a brief recovery but failed to reclaim its 50-week and 200-week moving averages, triggering a deeper and more prolonged downtrend.
Just like LUNA, OM now faces mounting skepticism despite the temporary bounce, with chartist AmiCatCrypto saying that the Mantra token can plunge 90% within a day after rallying for 100 days.
“If you ask me if the bull market is over. Short answer. YES,” she wrote, adding:
“Any gains from this point are considered bounces.”
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.