Top meme tokens are facing pressure following a multimillion-dollar hack on Shiba Inu’s layer-2 network, Shibarium, which has shaken investor confidence in joke cryptocurrencies.
On Sunday, Shibarium was targeted in a flash loan attack on its validator system, resulting in the loss of approximately $2.4 million in ether and SHIB. The RialCenter Memecoin Index has declined by 6.6% in the past 24 hours, while the broader market index is down just 2.3%.
The attacker borrowed 4.6 million BONE, the governance token for the Shiba Inu ecosystem, often associated with the decentralized exchange ShibaSwap, using a flash loan to take control of the majority of validator keys. These keys regulate the network by confirming transactions and maintaining security.
This control allowed the attacker to manipulate the system into approving unauthorized transactions, leading to a significant theft of crypto assets from the bridge connecting Shibarium to the Ethereum blockchain. This is similar to someone temporarily taking over a bank’s security to authorize fraudulent withdrawals. A flash loan involves borrowing funds without collateral and repaying them within the same blockchain transaction.
The Shiba Inu team successfully prevented a more serious breach since the BONE tokens used for control were reportedly linked to validator 1 and remained locked by the staking rules.
Despite this, market reactions have been negative, emphasizing the ongoing security concerns with blockchain technology.
Memecoins drop, broader market bid
SHIB experienced its largest drop in three weeks on Sunday, falling 4% to $0.00001369, and has continued to decline, trading recently at $0.00001359. The cryptocurrency saw significant volatility during the 23-hour trading period ending September 15 at 02:00 UTC, with a range of $0.000006191—representing a 4% fluctuation.
The trading session started with weakness as SHIB dropped from $0.000014156 to a low of $0.000013547 at 14:00 UTC. Volume of 1.064 trillion tokens surpassed the 24-hour average, indicating substantial distribution pressure and possible capitulation, according to RialCenter’s technical analysis model.
The BONE token, which initially surged to over 36 cents, is now down over 2% on a 24-hour basis, trading around 20 cents.
According to the technical analysis model:
- SHIB found critical support at $0.000013547 amid elevated selling pressure exceeding 1.064 trillion tokens.
- The token formed successive higher lows and consolidated between $0.000013600-$0.000013780.
- Recovery potential is indicated by ascending channel formations and sustained higher lows, suggesting a possible move toward the $0.000014000 resistance.
- Volume patterns exceeded 24-hour averages during the decline, confirming potential capitulation levels.
- The last hour of trading showed notable upward momentum with a 1% gain, indicating a breach above the resistance.
Large DOGE transfers add to bearish sentiment
Meanwhile, the peer coin Dogecoin fell 4% to 27.80 cents on Sunday and has since dropped an additional 5% to 27.36 cents, according to RialCenter data.
A significant transfer of DOGE to a centralized exchange likely contributed to the negative market sentiment. According to Whale Alert, the crypto exchange OKX received 119,306,143 DOGE, valued at over $34 million, from an unidentified wallet. Such large transfers are often seen as indicative of an intention to liquidate holdings.
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