SOL drops 8% triggering “bear flag” with $50 target
Solana (SOL) became one of the worst performing coins among the top cryptocurrencies today as traders gauge its links to the second-biggest hack to date.
The SOL price dropped nearly 8% to an intraday low of $94.64 as Wormhole, the bridge between the Solana and Ethereum blockchains, was mined for $325 million in wETH, as AZCoin News reported. Prior to Wednesday’s hack, SOL was trading as high as $112.
Hackers tricked a series of Solana smart contracts into signing illegal transactions in digital form as “guardians,” according to blockchain researcher Kelvin Fichter.
“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.”
A bearish setup is forming that can cause the SOL to drop more than 50%, known as a “bear flag”.
This is a pattern that occurs when price consolidates sideways/higher after a strong downward move, known as a “flagpole”. Under ideal conditions, the price would eventually break below the consolidation range and drop to the length of the flagpole.
So far, SOL/USD has been forming a bear flag, as shown in the chart below.
The downside target for SOL given by the bear flag is located near $50, almost halved from the current price.
Last year, Solana quickly broke into the top 10 cryptocurrencies by market capitalization with SOL gaining more than 11,000% as investors bet on the growth of DeFi and NFT. Entering 2022, however, SOL plummeted, wiping out nearly half of Solana’s market capitalization amid a broader crypto market decline.
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