Memecoins Are Under Pressure as SHIB and Dogecoin Slide After Shibarium Loses $2.4 Million in Hack

The BONE token engaged in the sudden loan attempt has almost completely erased the initial spike, as have losses in top memecoins.

The top meme tokens Shibarium, a multimillion-dollar hack of Shiba Inu’s layer-2 network, was trading under pressure after investor faith in joke cryptocurrencies was shaken.

Shibarium experienced a flash loan attack on its validator system on Sunday, resulting in the loss of around $2.4 million in ether (ETH) and SHIB. The CoinDesk Memecoin Index is down 6.6% in the last 24 hours. The larger market CoinDesk 20 Index is only down 2.3%.

To obtain possession of the majority of validator keys, the attacker borrowed 4.6 million BONE, the Shiba Inu ecosystem’s governance token, which is commonly tied to the decentralized exchange (DEX) ShibaSwap, via a flash loan. The keys operate as the network’s gatekeepers, authenticating transactions and maintaining security.

With such power, the attacker was able to trick the system into allowing illicit transactions and walk away with a huge sum of cryptocurrency from the bridge connecting Shibarium to the Ethereum blockchain. The procedure is similar to someone briefly taking over a bank’s security system to permit unlawful withdrawals. A flash loan is a loan that requires no upfront security and repays the borrowed funds in the same blockchain transaction.

The Shiba inu team was able to avoid a larger, more dangerous breach since the BONE tokens used to acquire control were purportedly attached to validator 1 and remained locked due to staking requirements.

Nonetheless, markets responded harshly to the incident, which highlights the ongoing security vulnerabilities with blockchain technology.

Memecoins fall, broader market bid

SHIB collapsed the most in three weeks on Sunday (UTC), losing 4% or $0.00001369, and has since weakened to trade at $0.00001359. The cryptocurrency witnessed significant volatility during the 23-hour trading session that ended on September 15 at 02:00 UTC, with the aggregate range comprising $0.000006191, a 4% fluctuation from peak to trough.

The session began with pre-dawn fragility, as SHIB fell from $0.000014156 to a crucial trough of $0.000013547 at 14:00 UTC. According to CoinDesk Research’s technical analysis model, the volume of 1.064 trillion tokens above the 24-hour average, indicating strong distribution pressure and potential capitulation.

The BONE token, which first doubled to more than 36 cents, is currently down over 2% on a 24-hour basis, trading at roughly 20 cents.

Based on the technical analysis model:

During strong volume selling pressure of more than 1.064 trillion tokens, SHIB established a key foundation of $0.000013547.
Between $0.000013600 to $0.000013780, the token generated repeated higher lows and consolidation characteristics.

Ascending channel patterns with continuous higher lows show recovery momentum, indicating a probable continuation towards the $0.000014000 resistance level.
Volume patterns above 24-hour averages throughout the downturn phase, indicating possible capitulation levels.
Final hour trading showed strong upward momentum, with a 1% gain, confirming a break above the resistance level.

Massive DOGE transfers increase bearish sentiment.

Meanwhile, SHIB’s peer dogecoin slid 4% to 27.80 cents on Sunday and has since dropped another 5% to 27.36 cents, according to CoinDesk data.

A huge DOGE move to a controlled exchange is believed to have exacerbated the market’s gloomy attitude. According to Whale Alert, the cryptocurrency exchange OKX received 119,306,143 DOGE, valued more than $34 million, from an unknown wallet. Such significant transfers are usually coupled with a desire to liquidate assets.

This article is for informational purposes only and does not constitute financial advice. Always do your own research before making investment decisions.

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