The “bear flag” on the SOL price chart draws a target of $50 as the wormhole hack reveals a security flaw

SOL was one of the worst-performing coins among top cryptocurrencies on Feb. 3, as traders assessed its connection to the second-biggest hack to date.

$325 million WEIGHT “fly without wings”

SOL price fell 5.5% below $96.5 as the Wormhole bridge between the Solana and Ethereum blockchains reportedly lost $325 million in Wrapped Ethereum (wETH) due to a technical vulnerability.

Before Wednesday’s hack, SOL was trading as low as $112.

Specifically, hackers have tricked a number of Solana smart contracts into digitally signing illicit transactions as if they were being executed by a validator, blockchain researcher Kelvin Fichter reported on . February, the night after the hack.

“The attacker makes it appear as if the auditors signed a 120,000 deposit in Wormhole on Solana, although they have not yet done so. All the attacker has to do now is convert that money into real money by withdrawing it to ETH.”

Wormhole said it will add ETH tokens “in the coming hours” to support WETH on the Solana network 1:1. However, the project has not clarified the source of the funds used to buy ETH tokens.

Bear flag activated

The 24-hour sell-off in the Solana market has triggered a continuation of the downtrend that could see SOL prices drop another 50%.

The pattern referred to as the “bear flag” that occurs when price consolidates sideways/higher after a sharp move down is called the “flagpole”. In the perfect scenario, the price would eventually break below the consolidation range and fall the length of the flagpole.

So far, SOL has formed this pattern as shown in the graphic below.

Daily SOL/USD price chart and Bear flag setting | Source: TradingView

SOL bearish downside target is near $50, nearly halved from levels traded on Feb 3rd.

Over the past year, SOL quickly entered the top 10 cryptocurrencies by market cap with a gain of more than 11,000% as investors bet on the growth of the decentralized finance sector and the impossible-to-replace token.

However, at the start of 2022, SOL’s price collapsed, wiping out nearly half of Solana’s market cap amid a broader crypto market decline – also dealing a massive blow to Bitcoin, ETH, and other currencies.

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