MANTRA's $5.4B Crash: How Supply Control Set the Stage for Disaster

Forbes

14-04-2025

In one of the most dramatic implosions in recent crypto events, MANTRA's OM token crashed 90% within hours, wiping out over $5.4 billion in market value. The price collapsed from $5.21 to $0.50 over the weekend before a brief rebound to ~$1.2 — a flash crash that stunned even hardened market veterans.
The community quickly compared the event to LUNA's historic collapse, but data shows MANTRA's fall was uniquely self-inflicted.
While the immediate trigger for OM's collapse was a sudden cascade of forced liquidations totaling $66.97 million in just 12 hours, it seems the underlying fragility had been building for months. MANTRA's team allegedly exercised extreme control over OM's supply, with up to 90% of tokens — about 792 million OM — held in a single wallet. This left only 10–20% of the total supply circulating freely, making the token acutely vulnerable to any significant sell pressure.
In the days leading up to the crash, on-chain data seems to have revealed that 17 wallets collectively offloaded 43.6 million OM — worth approximately $227 million — to exchanges, representing 4.5% of the circulating supply. At the same time, rumors emerged that tokens were being sold off-exchange at 50% or greater discounts, further undermining confidence in the open market.
These conditions would later set the stage for a liquidity death spiral. When major holders began exiting, the already thin order books couldn't absorb the sudden wave of sell orders, triggering cascading liquidations across exchanges and accelerating OM's collapse.
Before the crash, OM appeared almost unstoppable. The token hit an all-time high of $9.04 in late February this year and was still up 825% year-on-year just before the collapse, according to CoinMarketCap data. OM's price resilience, even as broader crypto markets corrected, painted a picture of strength that has made the community to follow.
In hindsight, it seems to have proven to be largely a manufactured illusion. MANTRA's tight grip on circulating supply, aggressive market making, and repeated delays in airdrop distributions — often justified by questionable "Sybil attack" claims — kept selling pressure artificially low. The project's public image was further bolstered by the announcement of a $108 million ecosystem fund just days before the crash.
Behind the scenes, however, the reality was far more fragile. OM's liquidity was thin, ownership remained highly centralized, and insider exits were quietly accelerating, all setting the stage for the token's eventual implosion.
MANTRA's crash is more than an isolated incident — it stands as a textbook case of how hidden risks can build quietly until they explode. Thin liquidity combined with heavy insider holdings created a fragile system, where even minor shocks had the ability to trigger a full collapse. Rumored OTC discount sales further eroded market confidence, producing inflated valuations that were never truly backed by open market demand.
Flashy growth stories can prop up prices temporarily, but they cannot hide underlying structural weaknesses forever. Despite MANTRA's downfall, the broader RWA sector remains resilient, with total value locked reaching a record $11 billion in the first quarter.
Still, MANTRA's fate serves as a brutal reminder: in crypto, control is a double-edged sword. When a handful of players dominate supply, so-called "price stability" can shatter into collapse almost overnight.