Is OM Worse Than LUNA? Comparing the Two Most Notable Crashes in Crypto History

The cryptocurrency market has witnessed some of the most dramatic financial collapses in history, with Terra (LUNA) and MANTRA (OM) standing out as two of the most infamous examples. While Terra’s collapse in May 2022 wiped out $50 billion in valuation and sent shockwaves through the crypto ecosystem, MANTRA’s recent 90% crash on April 14, 2025, has sparked comparisons to LUNA’s downfall. 

This article examines the similarities and differences between these two events and explores whether OM’s collapse could be considered worse than LUNA’s.

Terra (LUNA): A Catastrophic Collapse

Terra (LUNA) was once one of the most promising blockchain ecosystems, boasting a market capitalization of over $18 billion before its crash. At its core was TerraUSD (UST), an algorithmic stablecoin designed to maintain a 1:1 peg to the US dollar through a mint-and-burn mechanism involving LUNA tokens.

The collapse began on May 7, 2022, when over $2 billion worth of UST was unstaked from the Anchor Protocol, triggering a cascade of liquidations. UST depegged from its $1 value, falling to $0.91 and sparking panic among investors. 

Arbitrage opportunities led traders to exchange devalued UST for LUNA, flooding the market with excess tokens and driving LUNA’s price down from $116 to near zero within days.

Key factors in Terra’s collapse included:

- Algorithmic Instability: The mint-and-burn mechanism failed under extreme market pressure.

- Investor Panic: Mass withdrawals amplified the devaluation of UST and LUNA.

- Regulatory Concerns: The event highlighted the risks of unregulated stablecoins, prompting calls for stricter oversight.

MANTRA (OM): A Modern-Day Disaster

MANTRA’s OM token suffered a staggering 90% crash on April 14, 2025, dropping from $6.30 to below $0.50 within hours. Unlike Terra, OM’s collapse was not tied to an algorithmic stablecoin but rather to extreme bearish sentiment and a lack of buyer support during a rapid sell-off.

Key indicators during OM’s crash include:

- Relative Strength Index (RSI): OM’s RSI fell from 45 to an unprecedented low of 4 during the collapse, signaling extreme oversold conditions. Even after slight recovery to 10.85, buying activity remained negligible.

- Directional Movement Index (DMI): The DMI chart revealed intense selling pressure (-DI at 69.69) and near-zero buying pressure (+DI at 2.42), indicating traders were avoiding OM despite its discounted price.

- Market Sentiment: Analysts warned that OM lacked significant on-chain value, leaving it vulnerable to prolonged stagnation or further downside.

Unlike Terra’s collapse, which was driven by systemic flaws in its stablecoin model, OM’s downfall appears rooted in market dynamics and weak investor confidence.

Also read Can OM Recover? Looking at the Recent Mantra Crash

Facts Behind MANTRA (OM) Token’s Crash: On-Chain Insights and Market Dynamics

Despite some narratives suggesting a lack of true on-chain value or even a “rug pull” by the MANTRA team, a closer examination reveals a more nuanced reality.

1. On-Chain Value and Tokenomics

MANTRA Chain operates as a sovereign Layer 1 blockchain with a native OM token. The token transitioned from an ERC-20 token on Ethereum to MANTRA Chain’s mainnet in October 2024, using a “mirror bucket” mechanism to maintain supply consistency. The network supports a 3% inflation rate to incentivize validators, with a staking ratio of about 31.4% and a staking APR of 5.73%, reflecting a functioning on-chain economy rather than a hollow asset.

2. Exchange Activity and Liquidity Crunch

A critical factor in OM’s crash was the sudden deposit of over 43 million OM tokens (worth approximately $227 million) into centralized exchanges, notably OKX. This represented about 4.5% of the circulating supply flooding the market with sell orders, triggering a liquidity crunch. 

MANTRA’s co-founder JP Mullin attributed the crash to “reckless forced liquidations” by exchanges during low liquidity periods, exacerbating the price decline.

Major investors publicly denied involvement in coordinated sell-offs, emphasizing that the crash was driven by market dynamics rather than insider dumping.

Also read The Future of Mantra (OM) Coin Price: Will It Rebound or Continue to Fall?

3. Market Sentiment and Panic Selling

The rapid price drop created a feedback loop of panic selling among retail investors, further amplifying downward pressure. On-chain data shows the crash was broad-based, with low buying interest as indicated by the RSI and DMI metrics. Traders remain cautious, hesitant to accumulate OM at current levels.

Comparing LUNA and OM Crashes

Both crashes share similarities in their suddenness and scale but differ significantly in their underlying causes. Terra’s collapse resulted from structural flaws in its algorithmic model, while MANTRA’s crash reflects broader issues of weak market sentiment and lack of buyer confidence.

Also read Why Did the Mantra (OM) Market Crash Today?

Lessons Learned from Terra and MANTRA

1. Systemic Risks in Algorithmic Models

Terra highlighted the dangers of relying on untested mechanisms for maintaining price stability. The failure of UST underscores the need for robust reserve backing and regulatory oversight.

2. Importance of Investor Confidence:

MANTRA’s collapse demonstrates how quickly sentiment can turn against a token when buyers perceive limited long-term value or utility.

3. Regulatory Oversight

Following Terra’s downfall, regulators have pushed for stricter rules on stablecoins to prevent similar events. MANTRA’s crash may further fuel discussions about broader crypto regulations.

4. Market Dynamics Matter

Both crashes illustrate how liquidity crises can spiral out of control when selling pressure overwhelms buying activity.

Is OM Crash Worse Than LUNA?

Determining whether MANTRA’s crash is worse than Terra’s requires evaluating several factors:

- Scale: Terra wiped out $50 billion in valuation across its ecosystem, whereas MANTRA’s impact is more localized.

- Systemic Implications: Terra exposed flaws in algorithmic stablecoins, prompting global regulatory scrutiny. MANTRA has yet to trigger similar systemic concerns.

- Recovery Potential: After Terra’s crash, community efforts attempted to revive its ecosystem. MANTRA faces uncertain prospects due to weak buyer interest.

While both events are catastrophic, Terra’s collapse had far-reaching consequences for the crypto industry, whereas MANTRA's impact appears more contained.

Conclusion

The crashes of Terra (LUNA) and MANTRA (OM) serve as stark reminders of the volatility inherent in cryptocurrency markets. Terra exposed systemic risks tied to algorithmic stablecoins, while MANTRA highlights how poor investor sentiment can lead to rapid devaluation even without structural flaws.

The evidence does not support claims that OM lacks on-chain value or that the MANTRA team orchestrated a rug pull. Instead, OM’s crash was primarily a liquidity event triggered by large token movements to exchanges and exacerbated by forced liquidations.

As regulators continue grappling with how best to oversee digital assets, these events underscore the need for transparency, robust stability mechanisms, and investor confidence. Whether OM will recover or fade remains uncertain, but lessons from these collapses will shape crypto regulation and innovation for years to come.

FAQ: Comparing the OM and LUNA Crypto Crashes

1. What caused the Terra (LUNA) crash in 2022?

Terra’s collapse was triggered by the failure of its algorithmic stablecoin UST to maintain its $1 peg, leading to mass withdrawals, a flood of LUNA tokens, and a near-total loss of value.

2. Why did MANTRA’s OM token crash by over 90% in 2025?

OM’s crash was primarily due to a sudden influx of large token deposits on exchanges, especially OKX, causing a liquidity crunch and forced liquidations amid weak buyer interest.

3. Did MANTRA’s crash involve a “rug pull” or lack of on-chain value?

No. On-chain data shows MANTRA operates a functioning blockchain with staking and inflation mechanisms. The crash was driven by market dynamics and exchange liquidity issues, not a deliberate exit scam.

4. Is OM’s crash worse than LUNA’s?

While both crashes were severe, Terra’s collapse had broader systemic impacts and regulatory consequences. OM’s crash, though dramatic, is more localized and tied to market sentiment rather than fundamental flaws.