Key Notes
- Bybit’s Bitcoin liquidity has rebounded to pre-hack levels within a month.
- Lazarus Group was identified as the attacker behind the $1.5 billion ETH exploit.
- Institutional orders and new custody partnerships helped restore market depth.
Bitcoin liquidity on the crypto exchange Bybit has bounced back to levels last seen before the February security breach that shook the platform. A new report from market research firm Kaiko revealed that the exchange, especially for its Bitcoin trading, has regained a firm footing just weeks after the hack.
Liquidity Rebounds After $1.5 Billion Hack
On February 21, 2025, Bybit suffered a major security breach in which over 400,000 ETH, worth around $1.5 billion, was stolen. The attackers used a multi-signature exploit to trick cold wallet signers into approving a malicious transaction.
The United States Federal Bureau of Investigation (FBI) confirmed that the Lazarus Group, a North Korean-backed hacking organization, was behind the theft.
Following the incident, user confidence dropped sharply, according to the Kaiko report. The platform experienced more than 350,000 withdrawal requests. Trading slowed down, and market activity dipped across the board. The loss caused a noticeable decline in market depth, particularly for Bitcoin and altcoins on Bybit’s order books.
Despite these challenges, Kaiko’s report noted a recovery in Bitcoin liquidity. Market depth, which refers to the ability to process large trades without major price changes, dropped to 0.1% shortly after the hack. However, it has improved significantly, climbing back to around 8% in March. This helped return Bybit’s Bitcoin trading environment to its pre-breach state.
The digital exchange giant reclaimed 7% of its market share following the $1.4 billion hack linked to the Lazarus Group. The exchange also regained investor confidence by introducing new security measures and strengthening liquidity through its partnership with Zodia Custody.
It is worth noting that this recovery took place even amid wider market pressure. A shift in United States trade policy in March and April triggered a global trade conflict, placing extra strain on the crypto markets.
Yet, Bybit’s market depth bounced back in 30 days of the attack, showing resilience not matched by all its competitors.
Institutional Orders and Altcoin Recovery Play a Role
It is worth mentioning that Kaiko’s report also pointed to the role of Retail Price Improvement (RPI) orders in restoring stability. These orders, introduced on February 20, one day before the hack, allow institutional traders to provide better pricing for retail customers. The timing of this launch may have helped ease volatility during the turbulent period and contributed to the liquidity comeback.
While Bitcoin saw the strongest rebound, the report noted that altcoin liquidity is also recovering, though more slowly. The top 30 market capitalization altcoins have regained over 80% of their previous market depth on Bybit. Kaiko linked the slower pace to caution in the market caused by wider economic concerns.
In comparison, other exchanges, such as HTX, Bithumb, and MEXC, recorded double-digit liquidity declines in March. Bybit’s 30% increase in market depth placed it ahead of its peers despite the earlier setback. This rebound highlights how the platform managed to regain stability and trader trust in a short time.
Meanwhile, Bybit’s CEO Ben Zhou revealed that 68.5% of the stolen funds, amounting to roughly $960 million, are still traceable. He added that over 84% of the hacked funds, approximately $1.2 billion in ETH, have been swapped to BTC.
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Benjamin Godfrey is a blockchain enthusiast and journalist who relishes writing about the real life applications of blockchain technology and innovations to drive general acceptance and worldwide integration of the emerging technology. His desire to educate people about cryptocurrencies inspires his contributions to renowned blockchain media and sites.
