Deep Analysis: What Triggered The OM Sell-Off

The latest OM crash has caused confusion in the community. In a sequence of sudden sell-offs, $5.5 billion was wiped out. Several reports say the incident happened because one trader tried to control prices on two different exchanges.

This complete situation indicates the weakness in various crypto projects. Even though it seemed to have a large market value, a small amount of available money caused the whole thing to crash.

Analysing the OM collapse

When the MANTRA’s OM token crashed at the beginning of the week, it raised many unresolved questions. It triggered accusations of misconduct, and allegations of insider activity have followed the company since.

A new report says that the OM crash started because of one trader:-

He said, “This happened because of one or more players in the Binance perpetual market. They caused the whole chain reaction. The first drop below $5 happened when someone sold a short position worth about $1 million. This caused a price change of more than 5% in just a few microseconds. It looks intentional to me. They knew exactly what they were doing.”

After sparking this first irregularity, this OM trader constantly liquidated short positions every five-second period, which controlled the whole collapse. As there is constant liquidity on Binance, the OKX spot market observed a discount of close to 20%.

Seller Successfully Finds Exit Liquidity

This unusual activity on OKX was caused by a very large trader. A limit sell order means the seller sets the lowest price they’re willing to sell their crypto for. The sale only happens if the market price goes that high or higher. If not, the order just stays open and waits in the system.

This trader independently maintained the price on OKX for more than a minute, triggering market makers and arbitrage bots to purchase the assets despite widespread panic selling. Through this technique, the lawbreaker was able to discard OM tokens while the collapse was in progress. 

The problem is not that OM crashed because of someone trying to cause a crash. The real issue is that one person or group was able to control the market so completely.

For this kind of attack to succeed, OM’s market worth had to be much weaker than people expected.

Basically, even though OM’s market cap was extremely high in theory, it took a relatively low investment to make the RWA token unsteady and vulnerable. Some have been thinking that this trader was not trying to spark turmoil. 

Instead, they were likely investors who had to sell because of loan rules or risk limits. A small amount of market manipulation might have caused a much bigger problem.

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