Mantra, a popular real-world asset tokenization coin that collapsed by over 90% in 24 hours, bounced back after a statement by the founder and as investors bought the dip.
Mantra (OM) price soared by over 50% on Tuesday, making it the best-performing top 100 coin by percentage point gains. It rose to an intraday high of $0.82 in a high-volume environment.
Still, the coin remains significantly lower than its all-time high of $9.10. It would need to jump by over 1,000% from the current level to retest its record high.
In a statement, JP Mullin, who we interviewed last week, insisted that the OM price crash was not a rug pull as some analysts have estimated. Instead, he insisted that the plunge was because of a forced liquidation of large holders in an unnamed crypto exchange.
Mantra will publish a post-mortem of the recent crash and announce initiatives to build trust and support its price. Two of these events will include a token buyback and a burn mechanism, demonstrating the team’s commitment to the project.
A token buyback is when a project uses funds in its treasury to buy coins on the open market. On the other hand, a token burn refers to coins being removed from circulation by being moved to an inaccessible wallet.
In theory, these initiatives help to boost a token’s value by reducing those in circulation, which often boosts the staking yield. StakingRewards data shows that Mantra has a staking yield of 5.4%, higher than top coins like Hedera (HBAR) and Tron (TRX).
Mantra price surge could be a bull trap
The OM price rebound is likely because some investors see value in the coin after a significant crash. However, there is a risk that this rebound is part of a dead cat bounce or a bull trap.
A dead cat bounce occurs when a falling asset briefly rebounds as retail investors buy the dip. In most cases, this rebound is temporary, and the asset often resumes its downtrend. Buying a falling knife is a concept known as timing the market.
Popular cryptocurrencies have had similar dead cat bounces during their downfall. Some of these tokens include Terra Luna, Celsius, and FTX Token. Therefore, while the Mantra price surge might continue for a while, crypto analysts recommend patience and sound risk management strategies.
