Rapid Liquidity Restoration Affirmed by Kaiko Following Bybit's $1.5B Hack Incident
In the smoke and chaos that followed the mammoth $1.5 billion hack on Bybit in February 2025, the crypto giant stood tall, showcasing an unyielding resilience and shattering industry norms. A comprehensive evaluation by leading crypto analytics firm, Kaiko, reveals that Bybit's liquidity rebounded miraculously to pre-incident levels in a mere 30 days. This riveting recovery outpaced peers who grappled with similar crises, demonstrating Bybit's unwavering market commitment and user trustworthiness.
Bybit on the Rise: A 30-Day Miracle
Kaiko's revealing review shines light on Bybit's Bitcoin liquidity, which swiftly rocketed back to an average of $13 million daily, matching its pre-hack glory by the end of Q1 2025. Across various order book tiers, right from 0.1% to 8% of the mid-price, the platform witnessed a complete liquidity restoration - a testament to deep institutional involvement.
Laying the Groundwork: The Role of Ingenious Innovation
One of the decisive triggers to Bybit's breathtaking recovery was the timely introduction of Retail Price Improvement (RPI) orders on Feb 20, a single day before the attack. Restricted to manual traders on Bybit's interface, these orders are placed by institutional market makers to optimize pricing conditions for retail users. During the tumultuous days post-incident, these RPI orders cemented price stability, narrowed spreads, and defended manual users from unscrupulous algorithmic attacks.
Altcoin Performance and Tightening Spreads
The revival of liquidity wasn't confined to Bitcoin. Over 80% of liquidity for the top 30 altcoins by market cap returned by March, with key spreads across prominent tokens, including volatile assets like DOGE and XRP, tightening significantly. This indicated marked improvements in execution costs and renewed market maker optimism.
Additionally, bid-ask spread volatility, a vital stress indicator, dipped consistently in March, hinting at enhanced order book stability and increased liquidity provider participation.
Volumes Gaining Momentum Faster than Precedents
Although the broader market sentiment remained tepid amid economic uncertainties, Bybit surpassed previous recovery records set by comparable crises such as the 2016 Bitfinex hack or the 2023 Binance.US SEC case.
Kaiko's detailed statistics show that post-incident, hourly trading volume on Bybit peaked at $1.2 billion before normalizing and gradually climbing - underscoring stable user retention and burgeoning confidence in Bybit's resilient market performance.
A Beacon of Transparency in a Crisis-Ridden Sea
Bybit's commendable openness is another highlight from Kaiko's report. Where other entities faltered following similar catastrophes, leading to prolonged liquidity deterioration, Bybit's active communication and proactive market structure enhancements propelled it towards a swift recovery, transcending the industry average.
As the crypto landscape evolves, the litmus test for exchanges extends beyond flourishing during booms. Resilience in adversity, backed by quick decision-making and efficient structure innovations, now sets the benchmark for operational excellence in the industry. Bybit's extraordinary recovery and unwavering focus on user-centric solutions have set a new standard for operational resilience and market adaptability within the crypto sector.
About Bybit
Bybit, the second biggest crypto exchange by global trading volume with a burgeoning user base of over 60 million, is revolutionizing openness in the decentralized world by fostering an inclusive and equal ecosystem. Founded in 2018, Bybit specializes in Web3 collaborations with leading blockchain protocols to build robust infrastructure and drive on-chain innovation. Its robust security features, diverse marketplaces, user-intuitive interface, and advanced blockchain tools cater to builders, creators, and enthusiasts, empowering them to harness the full potential of Web3. Discover the future of decentralized finance at Bybit.com.
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Enrichment Data:
At the time of the hack, the Lazarus Group was attributed to the North Korean government, although no official statement was released by Pyongyang.
The hack was executed by exploiting vulnerabilities in Bybit's Ethereum cold wallet system using a combination of smart contract manipulation and weaknesses in transaction approval processes.
The hack resulted in the unauthorized transfer of nearly $1.5 billion in Ethereum to an unknown address, making it the largest cryptocurrency heist to date.
Security improvements and wallet management changes were implemented on Bybit post-hack, but the exact nature of these changes is not publicly disclosed for security reasons.
Regulatory entities worldwide have increased their attention towards crypto exchanges following the Bybit hack, emphasizing the need for improved security standards within the industry.
- In the aftermath of the $1.5 billion hack on Bybit, the crypto exchange demonstrated an unyielding resilience, returning to pre-incident liquidity levels in merely 30 days.
- Bybit's Bitcoin liquidity rocketed back to an average of $13 million daily by the end of Q1 2025, with restoration across all order book tiers, embodying deep institutional involvement.
- The introduction of Retail Price Improvement (RPI) orders by Bybit, just a day before the attack, played a significant role in maintaining price stability and defending manual users from algorithmic attacks during the incident.
- Over 80% of liquidity for the top 30 altcoins by market cap returned by March, with key spreads tightening significantly, reflecting improvements in execution costs and market maker optimism.
- Bid-ask spread volatility, a vital stress indicator, dipped consistently in March, indicating enhanced order book stability and increased liquidity provider participation.
- Although the broader market remained volatile, Bybit surpassed previous recovery records set by crises such as the 2016 Bitfinex hack or the 2023 Binance.US SEC case.
- Bybit's commendable openness, evident through active communication and proactive market structure enhancements post-incident, helped facilitate a swift recovery, transcending the industry average.
- The crypto landscape now values resilience in adversity and quick decision-making as crucial elements for operational excellence, with Bybit setting a new standard for operational resilience and market adaptability within the crypto sector.
- Bybit's resilience, user-centric solutions, and collaborations with leading blockchain protocols make it a beacon of decentralized finance and Web3 innovation, catering to builders, creators, and enthusiasts.
- Regulatory entities worldwide have emphasized the need for improved security standards within the crypto industry following the Bybit hack, with the hack serving as a wake-up call for exchanges to prioritize security and transparency.
