Solana Crashes 8% in a Day; Why Things Ain’t Looking Good?

Solana Crashes 8% in a Day; Why Things Ain’t Looking Good?

Solana is probably one of the most prominent of all the cryptocurrency ecosystems that have suffered from November 2021 until date.

The Solana blockchain has been through several woes, including price devaluation, a serious drop in market cap, incessant network crashes, and endless security exploits from attackers.

This year alone, Solana's market cap has dropped from a high of $66 billion to less than $11 billion. It is now ranked the 9th largest cryptocurrency by market cap, despite being ranked 6th in its prime.

In terms of price, the cryptocurrency was worth north of $200 in 2021. However, it is now worth about $29 at the time of writing.

One of Solana's latest and biggest woes this year is an exploit that hit one of its Defi lending protocols lately.

This exploit has led to the theft of a jaw-dropping $100 million this week and an 8% dip in Solana's price over the last 24 hours.

Tokenomics showing Solana price dip | Source: <a href=''><u>CoinMarketCap</u></a>
Tokenomics showing Solana price dip | Source: CoinMarketCap

The Mango Defi Exploit

Mango, a decentralized finance (Defi) lending protocol built on the Solana blockchain, has been exploited and robbed of more than $100 million.

Mango confirmed this exploit in a tweet, stating that the attackers carried out this exploit through price manipulation.

According to the blockchain auditing firm, OtterSec, the attackers manipulated the value of their collateral and used it to take a massive loan from the Mango Market's treasury.

OtterSec adds that their collateral (the MNGO governance token) was valued for more than it was worth and was then used to drain Mango's liquidity pools.

Overall, the hacker procured a loan of about $116 million, draining the platform's liquidity and compromising its USDC, MSOL, SOL, SRM, and MNGO holdings.

In detail, the hacker used USDC to inflate the price of their MNGO collateral from $0.02 to $0.91 in an impressive 10 minutes. Since MNGO wasn't a heavily traded asset like all the others, the exploit was relatively easy for the attacker.

While Solana has dumped only 8% in price at the time of writing, MNGO is down by a staggering 31%

Solana Price Outlook 

The price action of Solana has experienced an 8% downturn over the last day, especially now that bearish sentiment is at an all-time high in the market.

Over the last few weeks, Solana has managed to keep its price action in a tight range between the $30.5 and the $35.1 level.

However, right after the exploit on its Mango protocol, Solana broke the $31 support to the downside and is likely to experience more bearish price action.

Chart showing the breakdown of the $31 support and trend to the downside | Source: <a href=''><u>Tradingview</u></a>
Chart showing the breakdown of the $31 support and trend to the downside | Source: Tradingview

On the hourly chart, the RSI has shown extremely oversold conditions on Solana, pointing to extreme bearish pressure on the cryptocurrency price.

Perhaps the most disturbing part of this dip is that the $28.5 zone is one of the last support lines holding Solana's price up. Solana is trading dangerously close to this support for $28.43 and may pose devastating consequences if the cryptocurrency price manages to break through to the downside.

Disclaimer: The author's comments and recommendations are solely for educational and informative purposes. They do not represent any financial or investment advice. Always DYOR  (do your own research)

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