One of Bybit’s Ethereum cold wallets became the target of a major security breach on February 21, 2025 when it became the world’s second-largest cryptocurrency exchange by trading volume. Bybit experienced a security breach leading to a $1.5 billion exploitation during global economic uncertainty that raised essential questions about exchange security and liquidity dynamics and market stability. The report provides a complete investigation of both market reaction during the attack and Bybit recovery steps specifically examining liquidity metrics as well as Retail Price Improvement (RPI) order impact and industry-wide adaptations.
The Breach Amid Broader Economic Uncertainty
The Ethereum cold wallet exploit of Bybit in February 2025 generated substantial market disruption after triggering the breach on February 21. The attack happened during a vital time since the broader market experienced declining values. During this period major economic factors together with U.S. trade policies and DeepSeek’s launch of its large language model created significant market apprehension. The implementation of trade barriers against Canadian and Mexican imports induced extensive market discomfort that resulted in Bitcoin losing more than a 20% value relative to its highest point of January.
The immediate psychological damage from the Bybit breach affected crypto markets yet did not occur independently of other events. Various market factors caused the general decline of risk appetite for portfolio assets including meme-coins and politically linked tokens. Bitcoin price started its descent before the hack demonstrated that several vulnerabilities had influence on the market at that time.
Market conditions alongside Trading Volume patterns provided guidance about the situation
The attack on Bybit’s financial resources can be assessed by examining two important market metrics: spot trading activity levels and trading price variances. Spot trading volume which serves as an important market liquidity metric rapidly rose after the hackers accessed the platform. The spot trading volume of USDT pairs experienced a short-lived surge after the hack which fell below the yearly peak. The Bitcoin and altcoin trading volumes demonstrated significant decreases post-incident because of universal market trends beyond any Bybit-linked anomaly.
Bybit experienced lower trading volume reduction than other Centralized Exchanges (CEXs) which demonstrated drastic post-mid-February activity decline for their markets. The breach of Bybit led to a sharp decrease of its market share to reach its lowest point at 4% in the period following the incident. The platform managed to recover steadily by regaining 6-7% of market share according to Bitcoin (BTC) and Ethereum (ETH) trading volume data.
The level of tightness between buying and selling prices demonstrates a resilient level of market liquidity
Market liquidity is measured through the bid-ask spread which represents the highest buy price against the lowest sell price in trading platforms. Effective trades result from having narrow spreads which demonstrate both high market liquidity and low execution risks. The market capitalization event at Bybit caused the spread between buy and sell prices to increase greatly for PEPE and TRUMP as these meme coins demonstrated low levels of liquidity. Major cryptocurrencies ETH and BTC exhibited no significant variation in their bid-ask spreads because market liquidity remained stable for their high-volume status.
The ETH markets displayed strong liquidity resilience during the breach period because their spreads stayed below 0.001%. Dogecoin (DOGE) and Solana (SOL) continued to keep spreads narrow compared to other meme coins which indicates advanced market conditions and increased market liquidity.
Order Book Depth and RPI Orders represent essential tools that help financial recovery operations
Liquidity relies heavily on two vital indicators including bid-ask spreads together with order book depth. The order book depth volumes for BTC and ETH at Bybit experienced temporary reductions after the security incident. The BTCUSDT exchange lost $4M in available trades and ETH experienced a depletion of its $5M order book depth shifting to below $2M. Platform assets recovered their depth quickly because of the strategic implementation of Retail Price Improvement (RPI) orders which took effect one day before the security breach.
Pursued shortly after the security breach RPI orders introduced relevant interface retail trader support while increasing order quantity and minimizing spreads. The exclusive Bybit interface delivered Retail Price Improvement orders to retail traders which fortified market depth and quality particularly for high-volume assets BTC, ETH and SOL. The implementation of RPI orders because they made up more than half of trading market depth in XRP markets by the end of March thus demonstrating their power to restore liquidity.
Bybit’s Post-Incident Liquidity Resilience
The addition of RPI orders established a turning point for Bybit in its capability to restore market stability after the attack. The adoption of Risk-Proposition Incentive orders led to their prevalence in the order book depths of essential trading pairs which enhanced retail trader execution quality along with market depth. This essential move proved crucial in handling the rush period following the breach as it strengthened customer trading performance.
Conclusion: A Resilient Recovery Amid Global Challenges
The February 2025 Bybit breach became a significant event in cryptocurrency history because the exchange successfully recovered quickly and brought back market stability with precise liquidity interventions. Bybit implemented RPI orders in a quick manner which became essential for stabilizing its trading platforms by creating abundant liquidity together with minimal spreads that enabled a quick return of trading volumes alongside deepened order books.
The market share dip lasted briefly because Bybit reacted swiftly and deployed liquidity strategies that made the platform resilient in the face of new challenges. The platform’s recovery demonstrates its operational adversity together with its ability to function efficiently in the unstable global marketplace.
Execution of an effective liquidity management solution enabled Bybit to recover from the security breach as an exemplary model of crisis management. The RPI order system implementation alongside a solid market plan has enabled Bybit to win back trader trust which keeps the platform strong in international crypto trade. Bybit must adapt its business strategies to continued market changes for continued dominance within the cryptocurrency space.
About Bybit
Bybit is a leading cryptocurrency exchange providing advanced trading features and high liquidity across spot, derivatives, and perpetual markets. With a commitment to user security and innovation, Bybit continues to shape the future of crypto trading.