Solana value ‘bear flag’ paints $50 goal as Wormhole hack exposes safety gap

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Solana (SOL) grew to become one of many worst performers among the many prime cryptocurrencies on Feb. 3 as merchants assessed its hyperlinks with the second-biggest hack thus far.

$325M price of wETH gone

SOL value dropped by 5.50% to under $96.50 as Wormhole, a bridge between Solana and Ethereum blockchains, reportedly misplaced $325 million price of Wrapped Ethereum (wETH) attributable to a technical vulnerability.

Prior to the hack on Wednesday, SOL was buying and selling as excessive as $112.

Solana safety gap wants fixing asap?

Seems their consensus proceeds with solely 33% of the nodes

Hard math proofs present you want 66%+ for security. No ifs no buts

Possibilities: 1) is insecure, 2) is centralized, or 3) they’ve damaged Computer Science (unlikely)

— dom.icp ∞ (@dominic_w) February 3, 2022

In element, hackers tricked a sequence of Solana’s sensible contracts into signing illicit transactions digitally posing as “guardians,” reported blockchain researcher Kelvin Fichter on Feb. 2, the night time after the hack. He wrote:

“The attacker made it look like the guardians had signed off on a 120K deposit into Wormhole on Solana, even though they hadn’t. All the attacker needed to do now was to make their “play” money real by withdrawing it back to Ethereum.”

And one withdrawal of 80k ETH + 10k ETH later (all the things within the bridge on Ethereum), all the things was gone.

— smartcontracts (@kelvinfichter) February 3, 2022

Wormhole stated that it might add Ethereum’s native token Ether (ETH) “over the next hours” to again wETH on the Solana community on a 1:1 foundation. However, the challenge didn’t make clear the supply of the funds that might be used to purchase ETH tokens.

Bear flag triggered

The selloff within the Solana market throughout the final 24 hours got here nearer to triggering a bearish continuation setup which will ship the SOL value down by one other 50%.

Dubbed “bear flag,” the sample emerges when the value consolidates sideways/greater after a robust draw back transfer, known as “flagpole.” In an ideal world, the value finally breaks under the consolidation vary and falls by as a lot because the flagpole’s size.

So far, SOL/USD has been forming the identical bear flag sample, as proven within the chart under.

SOL/USD day by day value chart that includes bear flag setup. Source: TradingView

The draw back goal put forth by Solana’s bear flag sits close to $50, virtually midway down the place the SOL value has been buying and selling on Feb. 3.

Related: Report crowns Solana for utilizing least power per transaction, however there is a catch

Last yr, Solana sprinted into the top-ten cryptocurrencies by market cap with SOL rising by greater than 11,000% as buyers guess on the expansion of decentralized finance (DeFi) and nonfungible token (NFT) sectors.

However, coming into 2022, the SOL value has fallen sharply, wiping virtually half Solana’s market capitalization amid a broader crypto market decline — that additionally battered Bitcoin (BTC), Ether and different top-ranking digital property.

The views and opinions expressed listed below are solely these of the creator and don’t essentially replicate the views of Every funding and buying and selling transfer includes danger, it is best to conduct your individual analysis when making a call.

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