Ethereum (ETH) Price Plunges Below $80,000 as Pectra Upgrade on Sepolia Testnet Gets Exploited

On March 10th, Monday the crypto market experienced another sell-off as the technology stock in the U.S. market took a major hit. As a result, the Bitcoin price plunged below $80,000, accelerating the correction momentum in the majority of altcoins including ETH.

The crypto market experienced another sell-off on Monday as the technology stock in the U.S. market took a major hit, plunging the Bitcoin price below $80,000 and accelerating the correction momentum in the majority of altcoins.

As the Ethereum price faces the risk of another breakdown after its highly anticipated Pectra upgrade on the Sepolia testnet was hit by an exploit, rendering the network vulnerable to an attack.

Pectra Upgrade on Sepolia Testnet Faced With Exploit

Ethereum’s latest Pectra upgrade on the Sepolia testnet was disrupted by an unknown attacker who exploited an overlooked edge case, leading to a wave of empty block mining.

The incident, which occurred shortly after the upgrade's deployment on March 5, arose from a flaw in the deposit contract that failed to properly handle zero-token transfers. This allowed an attacker to quickly drain the deposit contract of its ether, rendering the testnet largely inoperable.

However, developers swiftly deployed a private fix to filter out these faulty transactions, avoiding public disclosure to prevent further exploits. Once 10% of network nodes were updated, full blocks resumed, and by 14:00 UTC, all nodes had implemented the final patch.

Despite the setback, the incident highlighted a weakness in Sepolia's token-gated deposit contract and the ERC-20 standard’s lack of restrictions, which could be exploited by attackers.

The Pectra upgrade on Sepolia was designed to introduce the Paymaster functionality for batch ERC-20 token deposits and withdrawals. However, the presence of a token-gated deposit contract, a common practice in testnets for distributing testnet tokens, created an opportunity for exploit.

The incident began when an unknown party repeatedly sent zero-token ERC-20 transactions to the Paymaster contract, attempting to overflow its internal counter and disrupt the generation of new blocks.

While the exploit did not impact Ethereum’s mainnet and was limited to the Sepolia testnet, the security vulnerabilities in the Pectra upgrade could trigger short-term uncertainty or a temporary downtick in the ETH price.

Double-Top Pattern Points to ETH Breakdown to $1,500

In the last three weeks, the Ethereum price witnessed a notable downturn from $4,210 top to $2,000 current trading value, accounting for 52% loss. This correction marked a second reversal from the $4k region revealing the formation of a double-top reversal pattern.

The M-shaped reversal suggests intense overhead supply, which leads to a prolonged downtrend in an asset’s price. During March’s first week, the ETH price plunged below the combined support of the Double-top neckline ($2,108), 200-week EMA, and 61.8 Fibonacci retracement level.

The breakdown paved the seller’s way for another 25% fall to seek support at $1,500.