Bitcoin Plunges Below $90K as Bybit’s $1.5B Hack Rocks Crypto Market

By Kevin B. Simon

Cover Image Attribute: Image by bitcoin-schweiz from Pixabay

On February 25, 2025, the cryptocurrency market reeled from a wave of events that sent Bitcoin, the world’s leading digital currency, plummeting below $90,000—a level not seen since mid-November 2024. This sharp 7.5% single-day decline marked Bitcoin’s most significant drop since August 2024, erasing nearly 8% of its value over the past week. The ripple effects extended across the broader crypto ecosystem, with Ethereum falling 9.5% to $2,386—its lowest since October. Smaller altcoins like Dogecoin, Solana, and Cardano faced even steeper losses, shedding around 20% each, according to Coingecko. At the center of this upheaval was a major security breach at Bybit, one of the world’s largest cryptocurrency exchanges, which severely shook investor confidence and highlighted the persistent vulnerabilities in the digital asset space.
The Bybit hack, which unfolded days before the price collapse, has been labeled the largest crypto heist in history. Hackers siphoned off approximately $1.5 billion in digital tokens—primarily in Ethereum—from one of Bybit’s cold wallets, a storage system designed to be offline and secure. The breach, which occurred on February 21, 2025, exploited a sophisticated vulnerability involving a masked user interface and URL that tricked wallet signers into approving a malicious transaction, according to Bybit’s CEO, Ben Zhou. The stolen 401,000 ETH exceeded the holdings of Ethereum co-founder Vitalik Buterin, who possesses approximately 240,000 ETH. Bybit, headquartered in Dubai with over 60 million users globally, ranks as the second-largest exchange by trading volume behind Binance, making the scale of this theft particularly alarming.
In response, Bybit scrambled to contain the fallout. The exchange faced a surge of over 350,000 withdrawal requests within hours as panicked customers sought to protect their funds. Zhou reassured users on social media that Bybit remained solvent and that client assets were backed 1:1, meaning the company could cover losses even if the stolen funds were not recovered. To stabilize reserves, Bybit secured bridge loans covering roughly 80% of the lost Ethereum and processed over $5.5 billion in outflows in the following days. Industry peers like Binance, Bitget, and HTX Group provided emergency transfers of Ether to assist. Despite these efforts, the damage to market sentiment was profound. Preliminary investigations have linked the North Korean hacking group Lazarus to the attack, a notorious organization responsible for prior major crypto thefts, including the $615 million Ronin Network hack in 2022 and the $305 million DMM Bitcoin heist in 2024. If confirmed, this would further highlight the escalating threat posed by state-sponsored cybercriminals, who stole $2.2 billion in digital assets in 2024 alone—a 21% increase from the previous year.
Bitcoin’s slide below $90,000 was not solely due to the Bybit breach. The cryptocurrency market was already on edge, grappling with macroeconomic pressures and shifting investor sentiment. Anxiety over upcoming U.S. tariffs, set to take effect on March 4 under President Donald Trump’s administration, has weighed heavily on risk assets like stocks and crypto. Concerns over tariffs on Mexico and Canada, key trading partners, have sparked fears of economic disruption, prompting a broader sell-off that saw the S&P 500 significant decline in a single day earlier last week. Additionally, disappointing earnings from tech giant Nvidia, a bellwether for speculative investments, further soured trader sentiment. Meanwhile, the Federal Reserve’s stance on maintaining interest rates has dampened hopes for a liquidity boost that might have buoyed digital currencies, exacerbating Bitcoin’s decline.
The scale of liquidations triggered by Bitcoin’s drop revealed the market's fragility. Over $1.34 billion in positions were wiped out within 24 hours, affecting 367,500 traders, according to Coinglass. Long positions—bets on rising prices—accounted for $950 million of these losses as Bitcoin breached the critical $90,000 support level. Analysts warn that this breakdown could signal a deeper correction, with projections suggesting a potential drop toward $85,000 or even $70,000 if selling pressure continues. Social media sentiment echoed these concerns, with users on X suggesting that a failure to hold $90,000 could trigger further declines. Despite the turmoil, there are signs of resilience: over 200,000 new Bitcoin wallets were created following the Bybit hack, suggesting some investors view the dip as a buying opportunity, anticipating a rebound toward the $100,000 milestone Bitcoin briefly touched earlier this year.
The broader crypto market has also suffered. Ethereum’s 11% plunge was compounded by its involvement in the Bybit hack, while Solana's price fell below $150, partly due to the laundering of stolen funds through meme coins on its Pumpfun platform. Other altcoins like Dogecoin and Cardano followed suit, reflecting a flight from riskier assets as fear, uncertainty, and doubt (FUD) gripped the market. Bitcoin-backed exchange-traded funds (ETFs) also faced pressure, with LSEG data showing a net monthly outflow of $644 million—the largest since their launch in January 2024. This retreat underscores the fragile confidence that had briefly propelled Bitcoin to record highs following Trump’s election in November 2024, a rally that now feels like a distant memory.
The Bybit hack has reignited debates over the security of centralized exchanges, which remain prime targets despite advances in cybersecurity. Cold wallets, once considered the gold standard for safety, have proven vulnerable, as seen in this and other recent breaches targeting exchanges like Phemex and WazirX. Industry leaders, including Binance CEO Changpeng Zhao, have highlighted a troubling pattern of multi-signature cold storage compromises, urging a shift toward decentralized, self-custodial solutions. Bybit’s call for the “brightest minds” in cybersecurity to help recover the stolen funds underscores the stakes involved. Despite collaboration with law enforcement and blockchain analysts like ZachXBT, who linked the hack to the Lazarus Group, the likelihood of recovering the full $1.5 billion remains slim due to the anonymity and speed of crypto transactions.
As the dust settles, the cryptocurrency market stands at a crossroads. Bitcoin’s fall, driven by the Bybit hack and exacerbated by macroeconomic headwinds, has exposed the sector’s volatility and susceptibility to external shocks. For some, the recent dip represents a buying opportunity in anticipation of a recovery. For others, it is a stark reminder of the risks inherent in a still-maturing industry. With Bybit vowing to refund affected users and the market digesting this latest blow, the coming days will test whether Bitcoin can regain its footing or if a steeper decline lies ahead. One thing remains clear: in the world of crypto, fortunes can shift as swiftly as a single hack. 

IndraStra Global is now available on
Apple News, Google News, Feedly, Flipboard, and  WhatsApp Channel

COPYRIGHT: This article is published under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License. https://creativecommons.org/licenses/by-nc-nd/4.0/

REPUBLISH: Republish our articles online or in print for free if you follow these guidelines. https://www.indrastra.com/p/republish-us.html