Native to the MANTRA ecosystem, the $OM token experienced a shocking sequence of market events on April 13 that reverberated throughout derivatives markets. In a rapid set of moves that should have been impossible, the Open Interest (OI) in $OM futures collapsed from $261 million to just $121 million within 10 minutes, starting at 18:10 UTC. This sudden contraction was the first leg in a broad-based futures unwind that coincided with an aggressive sell-off in the price of the token. At 19:40 UTC, the OI had dropped to a daily low of $47 million, while the spot price of $OM had tumbled to $0.45. This one-two punch reflects a serious confidence crisis in the market, with a number of exchanges apparently dealing with a cascade of liquidations. It’s increasingly looking like the kind of aggressive unwinding of futures positions that gets tied to mass liquidations and overleveraged traders being forced out of their positions. Leveraged Positions Surge Despite Unwinding Interestingly, while Open Interest was rapidly falling, a counterintuitive trend began to emerge. The Estimated Leverage Ratio (ELR) — a metric that compares the ratio of Open Interest to exchange reserves — nearly doubled to 0.4 by 19:30 UTC, right as the price broke down toward $0.57. Typically, a rising ELR suggests increasing speculative leverage in the market. However, in this case, the surge in ELR occurred even as OI was shrinking, signaling a different dynamic at play. $OM futures Open Interest collapsed from $261M to $121M within 10 minutes starting at 18:10 UTC on Apr 13, just as price began falling. By 19:40 UTC, OI hit a low of $47M as price dropped to $0.45 — a rapid, broad-based futures unwind. pic.twitter.com/BtMTj0RV1v — glassnode (@glassnode) April 14, 2025 This anomaly can be understood only by examining the ELR formula: it goes up not just when OI goes up but also when exchange spot reserves go down. Here, we have leverage ratios shooting up even as OI is diving, and the only way to conceptually fit that together is to imagine that spot holdings on exchanges are being withdrawn or reduced. And if we take seriously the idea that a lot of people suddenly don’t want to hold XRP on an exchange anymore, that’s a pretty good reason for the price to go down. This conduct suggests that not only were traders closing out futures positions, but they were also withdrawing spot tokens from exchanges. The reasons for doing so could range from changing one’s mind and wanting to move to a secure environment, to the more benign reduction of risk and preparation for potential reallocation. Whatever the case, it seems fair to say that the pullback in exchange token balances occurred simultaneously with an increase in leverage (dare we say craziness?) among those remaining in the market. Post-Crash Speculation and Another Washout After the first collapse and sharp volatility, the Estimated Leverage Ratio kept rising, hitting about 0.37 at 08:00 UTC on April 14. This climb reflects that following the initial wave of liquidations, we had a fresh batch of high-leverage positions opened up, probably by traders trying to catch a rebound or make a play on the oversold conditions. This optimism, though, did not last long. Shortly after peaking, the ELR corrected sharply, which can only be explained as the effect of another wave of liquidations or position exits, as these high-risk, high-leverage positions were once again flushed out in a not-so-controlled sell-off. Once again in our recount of the 2022 events, this back-and-forth movement, which saw some traders getting cited for market manipulation, shows just how fragile things had become between the bear and bull camps, how easily shaken trader sentiment now was. For the entire day that covered the 24-hour period from May 19 to 20, 2021, the crypto market was reeling from a panic. On the 19th, Bitcoin’s price had tumbled downward to $30,000, and the price kept dropping in the 24-hour period until it reached $25,000 on May 20. This meant that the spot price, or the price at which an asset is bought or sold for immediate delivery, had dropped $5,000 in just 24 hours. The author of the article cited two important reasons for this rapid drop in price. The first reason was that traders using leverage had to close out their positions. What Comes Next? Opportunities and caution are typically the two main results of a volatile market, and the move we just experienced was certainly violent. While the $OM token has seen some stabilization since then, the events of April 13 make it clear that risk management is essential, especially when you’re dealing with high leverage. For traders and investors, keeping an eye on some of our key health metrics can give you an early-warning sense of whether things are unstable and may lead to liquidation cascades. The MANTRA ecosystem is developing all the time, and with it, the token has building presence in the futures market. Consequently, there are growing amounts of both liquidity and volatility in the token. We are reminded of this presence and its effects by the sell-off of April 13, which, in turn, reminds us of how quickly leveraged futures market positions can unwind. Disclosure: This is not trading or investment advice. Always do your research before buying any cryptocurrency or investing in any services. Follow us on Twitter @nulltxnews to stay updated with the latest Crypto, NFT, AI, Cybersecurity, Distributed Computing, and Metaverse news !
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