Crypto Week: Broken Bridges and Double Top Pattern

The crypto industry currently has a wide and common perception that the next “Big move” will be full interoperability between different networks and protocols. Thus, token bridges have been created as a protocol to transfer tokens from one blockchain to another. However, such protocols seem to be quite vulnerable as two of them were hacked over the last six months. In February a wormhole protocol hack allowed hackers to mint themselves $320 million in Wrapped Ether without posting the required collateral. Ronin bridge was hacked in March, resulting in $625 million losses for clients. Token bridge Nomad recently suffered a raid by hackers causing $190 million in losses.

Nomad protocol supports Ethereum, Avalanche, Moonbeam, Evmos, and Milkomeda networks. The hack came after a fatal error emerged during standard protocol updates which allowed the code to process any correctly compiled message without validating it. So, anybody could take a previous transaction, replace the address with their own and submit the message again to make a “fake” transaction.

Such exploits have been discovered on a large scale, making the crypto industry highly sensitive to any fraud reports. Solana network suffered from an attack which exploited unidentified protocol holes which allowed for the hacking of 8,000 wallets and the loss of $10 million. The only protection from such fraud is to transfer assets to cold hardware wallets or to permanently keep phones on flight mode.

Bitcoin prices continue to move inside a global downtrend with a target of $20,000 per coin despite recent price spikes. The price has formed a double top pattern on the chart, and may dive below the strong support level, which has become a frequent phenomenon after the price hit such levels a month record. The first top came on July 20, while the second emerged on July 30. The double top pattern will be activated when BTC prices slip below $20,700, setting a new target at $17,000.

However, there is no reason to be completely fatalistic about the crypto industry as a dive in the price of Bitcoin below the previous upside cycle peak is not a final verdict. Institutional investors continue to fund various infrastructure projects related to digital assets. Bits Crypto, a mobile app used to invest in cryptocurrencies, has recently received $1.2 million in pre-seed funding to facilitate gradual investments in crypto. HOF Capital, an investor to MoonPay, Stripe and Kraken, led the round. MarqVision, a brand protection software developer that uses artificial intelligence to detect counterfeit products online, including NFT’s, attracted $20 million. Dragonfly Capital led the investment round for Debt DAO, a crypto lending protocol developer. Garry Vee NFT Project VeeFriends raised $50 million. So, investors continue to look for perspective projects and fund them despite recent corrections in the crypto market.