The Flow network is reeling after a major security breach that has put its technology, governance and market liquidity under fresh scrutiny — and investors are reacting harshly.
What happened
- On December 27 attackers exploited a vulnerability in Flow’s execution layer and drained roughly $3.9 million via a series of cross‑chain bridges.
- Validators halted parts of the network and put it into a read‑only state to stop further losses. The team initiated a chain restart and deployed upgrades tied to the Mainnet‑28 protocol.
- Flow later announced a protocol fix and said node operators were coordinating deployment. The network will be restored to a checkpoint prior to the exploit to contain the damage.
Criticism and systemic risk
- Several ecosystem participants criticized Flow for poor communication around the incident. Observers warned that halts and rollbacks can create cascading risks for exchanges, custodians and end users, increasing the complexity of recovery and potential liabilities.
Market fallout
- The native token, FLOW, has plunged amid the turmoil. In the past 24 hours the price fell roughly 15.25% to about $0.10, and is down nearly 39% over the last week. The token briefly hit a fresh low near $0.097.
- On‑chain and market indicators are signaling stress: the daily Relative Strength Index (RSI) has tumbled into extreme oversold territory (below 13), FLOW trades well below major exponential moving averages, and trading volume has declined on a longer timeframe — suggesting buyers are staying on the sidelines.
Regulatory and exchange pressure from South Korea
- Major South Korean exchanges including Upbit and Bithumb placed FLOW on investment watchlists following the incident. Under South Korea’s Virtual Asset User Protection Act, that designation can trigger a 60‑day review and potential delisting.
- Given South Korea’s importance to FLOW liquidity and trading volumes, even the prospect of reduced access or delisting has amplified selling pressure and the flight to safety.
Outlook
- Technically and sentiment‑wise, the outlook remains bearish. Most commonly tracked indicators point toward further downside rather than a near‑term recovery. While extreme oversold readings sometimes precede short squeezes or bounces, the broader price structure is damaged.
- For a sustained trend reversal, FLOW would need to reclaim significant ground — including major moving averages — and, critically, restore market confidence in the network’s security, governance and exchange support.
Bottom line
The exploit has produced immediate financial loss and a broader loss of trust that could take time to repair. Even with a protocol fix and planned rollback, the combination of technical weakness, regulatory scrutiny in key markets and fragile liquidity means FLOW faces an uphill battle before normal trading dynamics return.
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