MMT Short Squeeze Event Review: A Carefully Crafted Money-raising Game - ChainCatcher

Author: Zhou, ChainCatcher

The MMT short squeeze event has been four days ago, and the market aftermath has yet to settle. Previously high-profile promoters of MMT’s potential, the KOLs, have also failed to escape the lessons of the market. Today, the full picture of the incident is gradually becoming clear—from hype and user acquisition, pre-market warning signs of a breakdown, aggressive shorting and short squeeze, to a sharp decline that wiped out long positions. This collapse not only burst the speculative bubble but also exposed deeper issues within the industry, such as manipulation and trust crises.

Image source: X user @cloakmk

It is reported that Momentum, as a leading centralized liquidity market maker (CLMM) DEX on the Sui network, has attracted widespread attention with its Uniswap v3-style architecture and efficient trading mechanism. According to Rootdata, Momentum has received investments from institutions including OKX Ventures, Jump Crypto, Varys Capital, Coinbase Ventures, Amber Group, and Sui. In August this year, it participated in a $5 million strategic funding round for DeAgentAI (AIA).

Since its beta launch in March 2025, Momentum has accumulated over 2 million independent trading users, with total trading volume surpassing $18 billion, and total value locked (TVL) exceeding $500 million. These impressive achievements once fueled market expectations, but also planted hidden risks for subsequent turbulence.

In October 2025, Momentum Finance launched the MMT token community offering via Buidlpad, aiming to raise a total of $4.5 million. The primary valuation was set at $250 million, benefiting users qualified through Buidlpad HODL or Wagmi activities; the secondary valuation was $350 million, open to other qualified participants. Subscription amounts ranged from $50 to $2,000, with some users reaching up to $20,000 through staking or activity milestones.

Additionally, before October 25, users who staked over $3,000 in the Buidlpad HODL event could enjoy primary pricing and increase their investment limit to between $3,000 and $20,000; long-term community members participating in Wagmi 1 and Wagmi 2 could access primary valuation without staking. Content creators submitting original content about the Momentum ecosystem could also receive an additional priority allocation of over $150. This low-threshold, highly incentivized subscription model quickly ignited enthusiasm among retail investors and KOLs.

On November 4, the TGE day, during pre-market trading on Bybit, the MMT price opened at $0.3, below most retail ICO costs of $0.35, showing a clear breakdown trend. Many investors chose to short to hedge, attempting to lock in profits. After the official opening, spot and futures prices briefly surged to $0.8, a pattern consistent with recent new coin listings—initial rises followed by declines—making shorting seem a rational move and attracting more to join the short side.

However, the situation changed from the second day onward. On November 5, between midnight and 5 am, MMT’s price surged multiple times, climbing rapidly from lows to $6.47 on Binance futures, and even reaching $10.5 on Bybit. This sharp rally triggered massive liquidations of short positions, with over $100 million in shorts wiped out in a short period.

This maneuver resembled familiar tactics, leading the community to speculate that there may have been collusion between exchange insiders and market makers. Noted crypto KOL Crypto Fearless analyzed that the MMT short squeeze involved project team collusion with market makers to delay airdrops and control token distribution, along with sudden late-night price pumps. More secretly, internal exchange personnel reportedly shared large short position data with market makers, enabling precise shorting. This echoes a similar case exposed by Spartan Group in 2023, further shaking industry trust.

For retail participants and KOLs involved in the offering, they initially gained airdrops and priority allocations through promotion, but high leverage and market volatility led to liquidations. A typical example is trader @Elizabethofyou, who lost $130,000 after hedging with $7,000; her liquidation price was $6.85. She stated she was liquidated during a hedging trade on Bybit, which is currently under investigation.

Looking back, the active promotion by KOLs prior to the event laid the groundwork for the short squeeze. They created high market expectations via social media and content, attracting many retail investors. Moreover, the profit-making potential of previous Buidlpad projects boosted investor confidence. Notably, Buidlpad had announced a capital preservation mechanism, promising full refunds if MMT’s price fell below the community offering price within 30 days after TGE.

In theory, avoiding shorting could have prevented losses for new investors. However, pre-market low opens on Bybit triggered expectations of a breakdown, prompting emotional shorting. The project team, by delaying unlocks and executing late-night price pumps, successfully converted investor funds into their own profits; the sale of 38 million tokens further revealed the project’s short-term profit motives.

Currently, MMT trades around $0.6, down approximately 85% from its peak. Its future trajectory depends on the remaining holdings of the team. Notably, since noon yesterday, Momentum’s invested DeAgentAI token AIA suddenly surged, achieving a tenfold increase within a day. Previously, AIA was also manipulated with similar tactics to trigger liquidations, indicating a recurring pattern that warrants vigilance.

For investors, this incident serves as a stark warning: even when hedging short positions or bearish on a project, it is crucial to control risks in derivative trading. Using stop-loss orders and adjusting margin are essential, especially in abnormal trading environments. Without proper risk management, traders risk suffering painful losses. In an environment where regulation is still developing, such incidents may become commonplace.

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