Mantra bounces 200% after OM price crash but poses LUNA-like 'big scandal' risk

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.

As of April 14, OM was trading for as high as $1.10, almost 200% higher than its post-crash low of $0.37 a day prior.

OM/USDT daily price chart. Source: TradingView

The rebound came after Mantra addressed 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.”

Source: JP Mullin

The assurance calmed the OM token sell-off that had obliterated over $5 billion in market capitalization and liquidated $75.9 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 amid suspicious OM transfers to centralized exchanges right before the crash.

Source: AltcoinGordon

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.

Source: Ed

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 since 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 that month. It further transitioned from a capped to an uncapped, inflationary model with an initial 8% annual inflation rate.

Source: Wu Blockchain

OKX CEO Star Xu called Mantra a “big scandal,” adding that it would release relevant reports regarding its crash in the coming days.

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.

OM/USDT weekly price chart. Source: TradingView

Meanwhile, OM’s weekly relative strength index (RSI) has dropped to 33.31, signaling weakening momentum and increasing the risk of another breakdown.

Related: What is a rug pull in crypto and 6 ways to spot it?

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.

LUNA/USD weekly price chart. Source: TradingView

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 bull market is over. Short answer. YES,” she wrote, adding:

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.