The cryptocurrency market witnessed a dramatic event as OM, the native token of the MANTRA ecosystem, lost 90% of its value within just two hours. Known for its focus on Real World Asset (RWA) tokenization, MANTRA has been one of the more promising projects in the RWA narrative — until yesterday’s crash shattered investor confidence.
From Steady Decline to Total Collapse
OM began slipping early in the evening, initially shedding about 7% in value. But what followed was a full-blown price collapse, with the token crashing nearly 90% in a matter of hours.
The speed and severity of the drop led many observers to suspect a “rug pull”, a common scam in the world of meme tokens, where insiders dump their holdings on unsuspecting retail investors. The absence of any official communication from the MANTRA team in the immediate aftermath only fueled speculation that the project might be compromised.
Team Responds: “Not a Rug Pull”
After hours of silence, the MANTRA team finally issued a statement:
“We confirm that MANTRA remains fundamentally strong. This sell-off was not initiated by the team, but was the result of a cascade of irresponsible liquidations on various exchanges.”
The statement sought to distance the project from accusations of foul play, and instead pointed to forced liquidations as the root cause of the meltdown.
What Likely Happened: A Cascade of Margin Liquidations
Though the full picture is still emerging, early analysis suggests that a large leveraged trader may have been at the heart of the crash. Here’s how it typically works:
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A trader takes a leveraged long position on OM, betting that the price will rise.
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As the price begins to fall, the trader’s margin becomes insufficient to support the open position.
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If the trader fails to top up their margin — a margin call — the exchange is forced to liquidate the position by selling the underlying OM tokens on the open market.
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In markets with low liquidity, such forced selling pushes prices down sharply, triggering more liquidations in a domino effect.
This type of cascading liquidation is common in highly leveraged crypto markets, including Bitcoin, where drops of 5–10% due to margin calls are not unusual. But in smaller-cap tokens like OM, with less liquidity and thinner order books, such events can erase nearly all market value in minutes.
Long-Term Damage to Trust and Reputation
Even if the crash was not the result of malicious behavior, the reputational damage to MANTRA is significant. Investor trust — especially in the crypto world — is fragile and hard to rebuild. Projects associated with Real World Assets are often promoted as more stable and institutional-friendly, which makes this crash all the more concerning.
MANTRA now faces an uphill battle to reassure the market, restore investor confidence, and prove its fundamental value once again.
Key Lessons for Crypto Investors
This incident is yet another stark reminder of the dangers of excessive leverage and illiquid markets:
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Leverage amplifies both gains and losses. Traders often use leverage to boost potential profits, but when trades go south, liquidations can destroy entire portfolios — and markets.
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Low liquidity equals high risk. When a token has limited trading volume, any sizable forced sale can cause disproportionate price drops.
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Even promising narratives like RWAs are not immune. OM was considered part of the next wave of institutional-grade crypto, yet it suffered one of the worst daily crashes of the year.
Conclusion: A Wake-Up Call for the RWA Sector
The crash of OM is more than just a cautionary tale about leverage — it’s a red flag for the entire Real World Asset tokenization space, which is gaining popularity among institutional investors.
To build lasting value, projects must ensure liquidity, transparency, and robust risk management mechanisms. Otherwise, even fundamentally sound projects can collapse under the weight of speculation and poor trading practices.
Investors would do well to remember: in crypto, technical strength and market mechanics matter just as much as a compelling narrative.
