Solana (SOL) price managed to defend the $70 psychological support on Thursday after slipping nearly 9% from an intraday high of $85.1 to $77.6 earlier in the week. The token stabilized around $80 by press time, but the path to recovery remains fraught with headwinds.
Drift Protocol Exploited for $285M, Solana TVL Drops $1B
The initial sell-off followed a $285 million exploit on Drift Protocol, a native Solana trading platform. According to DeFiLlama, the total value locked on Solana has shrunk by nearly $1 billion since the incident, signaling capital flight from the ecosystem. The breach is one of the largest this year on Solana, reigniting security concerns.
Middle East Tensions Fuel Risk-Off Sentiment
Geopolitical risk compounded the pressure. Iranian officials threatened retaliatory strikes against 18 U.S. military assets, while the U.S. struck supply bridges and logistics hubs. Oil prices surged above $110 on fears of a prolonged Strait of Hormuz closure, stoking inflation fears. The macro backdrop pushed investors away from crypto, adding to Solana's downside.
Technical Setup: Falling Wedge Nears Breakout
On the daily chart, Solana is approaching the apex of a multi-month falling wedge pattern — typically a bullish reversal formation. A confirmed breakout could propel the price toward $111, the 23.6% Fibonacci retracement level, representing a potential 38% gain from current levels. However, technical momentum tells a different story.
Weak Momentum Despite Wedge Pattern
The Chaikin Money Flow index sits at -0.05, still in negative territory, indicating that buying pressure remains insufficient and capital continues to exit. The Aroon Down stands at 92.86% versus an Aroon Up of just 35.71%, underscoring that bears still dictate trend strength. This divergence suggests that even if a wedge breakout materializes, the downtrend has not yet fully reversed, and confirmation will require sustained buying volume.