Story crashes 25%: Is it the next Mantra?
A sharp decline of the Story token, 25% in just one hour, triggered concerns about a repeat of the Mantra crash.
The latest Story (IP) price drop has traders concerned over a repeat of the Mantra (OM) crash. Notably, on April 14, the IP token was down from $4.24 to a daily low of $3.02. In just one hour, the token registered a 25% price drop.
Even though IP somewhat recovered to $3.73, the flash crash raised concerns over market liquidity and potential insider selling. What is more, traders on social media linked the Story crash to the recent Mantra crash, which lost 90% of its value and $5 billion in market cap the same day.
According to crypto journalist Colin Wu, most of IP’s trading volume was concentrated in Binance Futures and OKX spot markets, the same platforms implicated in the Mantra crash. After the sudden drop, both exchanges issued conflicting explanations.
Low liquidity, or insider selling, hurt projects like Story
For one, Binance concurred with the Mantra CEO, who blamed forced liquidations on several exchanges. These can happen in times of low liquidity, when sharp changes in prices result in liquidations of big positions in the futures market.
OKX, on the other hand, pointed out that the Mantra made changes to its tokenomics model. The exchange also noted major token deposits to several centralized exchanges. This explanation aligned more with that of independent investigators, who blamed insider selling as the likely culprit.
For smaller projects like Story and Mantra, both low liquidity and insider selling can be a source of significant volatility. According to a report by Kaiko research, the sudden crash of the Mantra token resulted in $21 million in liquidations of long positions, which exacerbated price pressures.
While Story recovered, the sudden crash revealed the volatility risks of smaller tokens. In a situation of low liquidity, a few big trades can cause major price moves.
