Solana (SOL) Struggles in the Aftermath of the Wormhole Bridge Attack

Solana(SOL) has witnessed a price decline over the last two days. Recently, an Ethereum bridge linking the Solana and Ethereum blockchains lost more than $320 million in what was believed to be a hack. The native token for the network, SOL, currently trades at $98, which is about 60% off its all-time high from its November 6, 2021, all-time high of $260.06. 

SOL Price Drops 8.5 %

The token currently has a market capitalization of $31 billion. Despite the ongoing outage, Solana continues to be ranked at #7 on CoinMarketCap. Currently, it has a circulating supply of 314.8 million SOL coins and a trading volume of $3.2 billion in 24 hours.

The price of SOL has significantly dropped in 2022. It wiped out nearly half of Solana’s market capitalization during a broader crypto market downturn. Solana’s price accelerated downwards again after attempting to recover from the recent drop. SOL is now trading at $97.04, down 8.54 percent in the last 24 hours. This time, the price could have fallen because a bridge between Solana and Ethereum, known as Wormhole Bridge, was attacked. The result was a loss of 120000 wrapped ETH worth $320 million.

The “bear flag” pattern appears when the price consolidates sideways/higher after a strong downside move, referred to as a “flagpole.” The price eventually breaks underneath the consolidation scope and drops by as much as the flagpole’s length in a perfect world.

SOL/USD has been forming the same bear flag pattern so far. Solana’s bear flag’s downside target is near $50, or nearly half of where the SOL price has been trading on Thursday.

80,000 ETH Hack to Further Test Solana Support

An 80,000k ETH hack crippled the Solana wormhole overnight. It is DeFi’s second-largest exploit ever, just behind the $600 million Poly Network crypto heist. Furthermore, it is the most significant attack on Solana, a rival to ethereum. That is gaining increasing popularity in NFT and DeFi ecosystems.

The Solana Wormhole bridge was reportedly targeted by hackers, with 80,000 WETH sent to the hacker’s wallet. The result for the Solana platform is unbacked ETH on the Solana blockchain. Developers are reportedly negotiating with hackers, according to a news report. The wormhole page has since been removed.

According to CertiK, the attacker’s profits thus far total at least $251 million in ethereum. The amount is nearly $47 million in Solana, and more than $4 million in USDC, a stablecoin pegged to the US dollar price.

Solana’s Unending Woes

The bridge hack is the latest in Solana’s long line of issues. In January, the Solana network experienced four consecutive network outages, followed by this hack.

The news of a distributed denial-of-service (DDoS) attack hit the wires just as the new year began. In less than a year, it was the third attack after an attack at the end of 2021 disrupted network performance for several hours. However, the most significant outage for the network was a 48-hour outage, which resulted in significant losses for users.

Following these attacks, the price remained $168.33, with only a 2% drop in 24 hours. From here, SOL recovered and started rising again.

Based on the four-hour chart, the SOL price has been under intense pressure in the past few months. It has also managed to dip a few points below both the 25-day and 50-day moving averages during this time.

There is also a bearish crossover with the MACD pattern between the red rectangle and the MACD. As a result, the Solana price is likely to fall further in the near term. Furthermore, the concerns about the Fed persist.