Coindesk

By Omkar Godbole (All times ET unless indicated otherwise)

Bitcoin and ether, the two largest digital assets by market value, remain largely within their recent trading ranges two days after the $1.5 billion hack of Bybit, one of the top cryptocurrency exchanges.

Perpetual funding rates for both are positive, indicating a bias for long positions that benefit from price rises. Bitcoin options trading on Deribit show a bullish bias for call options across all time frames, while those tied to ether show a downside bias into March. The bias for ether puts, however, has been present since well before the hack.

Meanwhile, Volmex Finance’s 30-day bitcoin implied volatility index has dropped to an annualized 48.45%, the lowest since July, according to charting platform TradingView. Ether’s implied volatility has reversed the minor weekend spike from 67% to 70%.

The calm is a sign of market maturity, according to QCP Capital. “The price action underscores the growing maturity of the crypto landscape since the FTX collapse in 2022, particularly in the crypto credit market,” the trading firm said. “Every facet of crypto — from custodial and security solutions to corporate governance and transparency — has strengthened with each past crisis.”

Overall, the crypto community is reassured by Bybit’s ability to manage over $6 billion in withdrawals following the hack. Plus, the exchange has filled the gap in its ETH reserves.

According to Mena Theodorou, a co-founder of crypto exchange Coinstash, all eyes will be on Solana’s SOL as Franklin Templeton, one of the world’s largest asset management firms, has submitted a spot SOL ETF proposal to the SEC. In addition, 11.2 million SOL (2.3% of total supply) from the FTX estate are scheduled to be unlocked on March 1, which could breed market volatility. That has already boosted volume in SOL put options on Deribit.

President Donald Trump’s decision to audit gold reserves at Fort Knox in Kentucky has piqued interest in the crypto community. “While routine gold audits are rare, the timing is notable as Trump continues to push a pro-crypto narrative. If the gold supply turns out to be lower than expected, it could reinforce Bitcoin’s case as digital gold — and possibly even as a superior reserve asset,” Theodorou said in an email.

In traditional markets, the yen continues to gain ground against the U.S. dollar and growth-sensitive commodity currencies such as the Australian dollar, calling for caution on the part of the risk asset bulls. Stay alert

What to Watch

Crypto:

Feb. 24, 11:00 a.m.: Bugis network upgrade goes live on Enjin Relaychain mainnet.

Feb. 24: At epoch 115968, testing of Ethereum’s Pecta upgrade on the Holesky testnet starts.

Feb. 25, 9:00 a.m.: Ethereum Foundation research team AMA on Reddit.

Feb. 25: Pascal hard fork network upgrade goes live on the BNB Smart Chain (BSC) testnet.

Feb. 25: Reactive Network mainnet launch, as well as the initial creation and distribution of the REACT token.

Macro

Feb. 24, 8:00 p.m.: Bank of Korea’s (BOK) Monetary Policy Committee announces its interest rate decision.

Base Rate Est. 2.75% vs. Prev. 3%

Feb. 25, 10:00 a.m.: The Conference Board (CB) releases February’s “Consumer Confidence Index” report.

CB Consumer Confidence Est. 102.1 vs. Prev. 104.1

Feb. 25, 1:00 p.m.: Richmond Fed President Tom Barkin delivers a speech titled “Inflation Then and Now.”

Feb. 25, 7:30 p.m.: The Australian Bureau of Statistics releases January’s “Monthly Consumer Price Index Indicator” report.

Monthly CPI Indicator Est. 2.5% vs. Prev. 2.5%

Earnings

Feb. 24: Riot Platforms (RIOT), post-market, $-0.18

Feb. 25: ​​Bitdeer Technologies Group (BTDR), pre-market, $-0.17

Feb. 25: Cipher Mining (CIFR), pre-market, $-0.09

Feb. 26: MARA Holdings (MARA), post-market, $-0.13

Feb. 26: NVIDIA (NVDA), post-market

Token Events

Governances votes & calls

Sky DAO is voting on key changes to the protocol including reducing the Smart Burn Engine’s protocol-owned liquidity to $15 million, and adjusting some parameters to enable immediate buybacks and direct all surplus to burning.

Ampleforth DAO is voting on reducing the Flash Mint fee to 0.5% and the Flash Redeem fee to 5% to increase the system’s adaptability.

DYdX DAO is discussing the establishment of a DYDX buyback program. Its initial step would allocate 25% of the dYdX’s protocol net revenue to buy back the token.

Unlocks

Feb. 28: Optimism (OP) to unlock 2.32% of circulating supply worth $35.43 million.

Mar. 1: DYdX to unlocked 1.14% of circulating supply worth $6.24 million.

Mar. 1: ZetaChain (ZETA) to unlock 6.48% of circulating supply worth $13.7 million.

Mar. 1: Sui (SUI) to unlock 0.74% of circulating supply worth $81.07 million.

Mar. 7: Kaspa (KAS) to unlock 0.63% of circulating supply worth $15.55 million.

Mar. 12: Aptos (APT) to unlock 1.93% of circulating supply worth $69.89 million.

Token Listings

Feb. 25: Zoo (ZOO) to be listed on KuCoin.

Feb. 26: Moonwell (WELL) to be listed on Kraken.

Feb. 27: Venice (VVV) to be listed on Kraken.

Feb. 28: Worldcoin (WLD) to be listed on Kraken.

Conferences:

CoinDesk’s Consensus to take place in Toronto on May 14-16. Use code DAYBOOK and save 15% on passes.

Day 2 of 8: ETHDenver 2025 (Denver)

Feb. 24: RWA London Summit 2025

Feb. 25: HederaCon 2025 (Denver)

March 2-3: Crypto Expo Europe (Bucharest, Romania)

March 8: Bitcoin Alive (Sydney, Australia)

Token Talk

By Francisco Rodrigues

The perpetrators of the near $1.5 billion hack of major crypto exchange Bybit have seemingly turned to popular Solana-based token launchpad Pump.fun to try to launder the stolen funds.

Pump.fun linked a token called “QinShinhuang (500000)” to the hacker(s) after a 60 SOL transfer and removed the token from its front end to prevent this type of activity.

Pump.fun could meanwhile soon launch its own automated market maker (AMM) in a blow to popular Solana-based decentralized exchange Raydium, which benefited from being the platform graduating Pump.fun tokens traded on.

Derivatives Positioning

SOL put options expiring this Friday on Deribit trade at a premium of 7 vol points to calls, reflecting strong downside fears.

Ether options continue to show concerns of downside risk until the end of March, with subsequent expiries reflecting a bullish positioning. BTC options are biased bullish across time frames.

BTC block flows on Deribit featured calendar spreads and a bull call spread. ETH flows included long positions in calls at strikes of $2,850 and $2,900 and a short strangle in the April expiry.

Funding rates in perpetual futures linked to the OM token remain negative, a sign of traders taking protective bearish bets as the spot price continues to hit record highs.

Market Movements:

BTC is up 0.7% from 4 p.m. ET Friday at $95,581.78 (24hrs: -0.6%)

ETH is up 1.91% at $2,679.37 (24hrs: -4.25%)

CoinDesk 20 is up 1.18% at 3,089.09 (24hrs: -3.52%)

Ether CESR Composite Staking Rate is unchanged at 2.99%

BTC funding rate is at 0.0069% (7.51% annualized) on Binance

DXY is unchanged at 106.6

Gold is unchanged at $2,936.29/oz

Silver is unchanged at $32.47/oz

Nikkei 225 closed on Friday +0.26% at 38,776.94

Hang Seng closed on Monday -0.58% at 23,341.61

FTSE is up 0.1% at 8,668.07

Euro Stoxx 50 is unchanged at 5,477.70

DJIA closed Friday -1.69% at 43,428.02

S&P 500 closed -1.71% at 6,013.13

Nasdaq closed -2.2% at 19,524.01

S&P/TSX Composite Index closed -1.44% at 25,147.03

S&P 40 Latin America closed -2.89% at 2,408.55

U.S. 10-year Treasury rate is up 1 bp at 4.44%

E-mini S&P 500 futures are up 0.5% at 6,059.25

E-mini Nasdaq-100 futures are up 0.38% at 21,761.75

E-mini Dow Jones Industrial Average Index futures are up 0.71% at 43,796.00

Bitcoin Stats:

BTC Dominance: 61.65% (24hrs: 1.3%)

Ethereum to bitcoin ratio: 0.02801 (-4.4%)

Hashrate (seven-day moving average): 789 EH/s

Hashprice (spot): $56.53

Total Fees: 5.65 BTC / $540,507

CME Futures Open Interest: 169,620 BTC

BTC priced in gold: 32.3 oz

BTC vs gold market cap: 9.17%

Technical Analysis

SOL’s daily chart shows the cryptocurrency has dropped below its criticial 200-day simple moving average.

Plus, it has confirmed a double top breakdown with a move below the horizontal (yellow) support line.

The bearish technical setup suggests scope for continued losses toward $120, which acted as a floor last year.

A move above the lower high of $209 printed early this month would invalidate the bearish technical outlook.

Crypto Equities

MicroStrategy (MSTR): closed on Friday at $299.69 (-7.48%), up 1.21% at $303.31 in pre-market

Coinbase Global (COIN): closed at $235.38 (-8.27%), up 2,02% at $240.20

Galaxy Digital Holdings (GLXY): closed at C$22.76 (-11.27%)

MARA Holdings (MARA): closed at $14.66 (-8.09%), up 0.41% at $14.72

Riot Platforms (RIOT): closed at $10.46 (-9.83%), up 2.77% at $10.75

Core Scientific (CORZ): closed at $10.80 (-8.78%), unchanged in pre-market

CleanSpark (CLSK): closed at $9.24 (-8.15%), up 0.97% at $9.34

CoinShares Valkyrie Bitcoin Miners ETF (WGMI): closed at $20.52 (-8.76%)

Semler Scientific (SMLR): closed at $47.74 (-8.61%), up 0.65% at $48.05

Exodus Movement (EXOD): closed at $47.81 (+0.02%)

ETF Flows

Spot BTC ETFs:

Daily net flow: -$69.2 million

Cumulative net flows: $39.57 billion

Total BTC holdings ~ 1.167 million.

Spot ETH ETFs

Daily net flow: -$8.9 million

Cumulative net flows: $3.15 billion

Total ETH holdings ~ 3.808 million.

Source: Farside Investors

Overnight Flows

Chart of the Day

Daily transactions and cumulative trading volumes on Solana’s decentralized exchanges have declined markedly since the debut of the TRUMP memecoin a month ago.

While You Were Sleeping

Bybit Closes ‘ETH Gap’ as Exchange Replenishes $1.4B Hole After Hack (CoinDesk): On-chain tracking service Lookonchain Bybit received around 446,870 ETH via loans, large deposits and ether purchases over the past two days.

Solana Whales Increase Engagement in Bearish Options Plays on Deribit Amid SOL Meltdown and Impending Unlock (CoinDesk): A steep drop in the SOL price, waning Solana network activity from memecoin declines and a massive token unlock on March 1 are fueling a surge in SOL put options on Deribit.

ECB Might Have to Lower Key Rate to Level That Stimulates Economy, Wunsch Says (Financial Times): National Bank of Belgium Governor Pierre Wunsch said that if eurozone inflation cools and demand remains weak, the ECB’s key rate could drop to 2% by mid-2025.

Options Traders Line Up Hedges Before Pivotal Nvidia Earnings (Bloomberg): Despite the S&P 500 rally, traders are bracing for volatility, with surging VIX call activity hinting at caution.

Trump Hands Russian Economy a Lifeline After Three Years of War (Reuters): Russia’s persistent inflation and 21% interest rate, driven by its war in Ukraine, are partly alleviated by Trump’s push for a peace deal that has boosted the ruble to six-month highs against the dollar.

Singapore Inflation Climbs at the Slowest Rate Since February 2021 (CNBC): In January, Singapore’s headline inflation rose 1.2% year-on-year, below the 2.15% increase expected by economists polled by Reuters. Core inflation fell to 0.8%.

In the Ether

Bitcoin’s (BTC) recent narrow price range between $94,000 and $100,000 has perplexed many market participants.

While the largest cryptocurrency historically shows strong directional moves followed by months-long consolidations, known as stair-step price movements, this time feels different. Usually consolidations are followed by a breakout. In contrast, now the range has narrowed. In December it was $90,000-$110,000.

Attendees at last week’s Consensus Hong Kong shared the sentiment, with some prominent market makers and industry figures suggesting the rampant memecoin frenzy is a key reason behind the lull in BTC and the broader altcoin market, which feels similar to the lackluster price action from seven years ago.

“The market has been very saturated with memecoin launches, and crypto natives are kind of exhausted by this,” said Evgeny Gaevoy, CEO of leading market maker Wintermute, at the conference.

Tokens such as President Donald Trump’s TRUMP and the LIBRA token promoted by Argentine President Javier Milei tend to draw liquidity from more established cryptocurrencies, Gaevoy said, with traders buying those at the expense of other coins.

Such stagnant BTC price behavior is reminiscent of September-October 2018, when the range tightened over successive weeks, ultimately settling between $6,000 and $6,400.

It’s not a totally parallel situation, though. That occurred during a bear market, following a steep decline from bitcoin’s then-record high of nearly $20,000, making the range play somewhat justifiable as investor confidence waned. This time around, BTC is only about 12% below its all-time high.

Presidential memecoins

Three days before his Jan. 20 inauguration, Trump debuted his official token, TRUMP, which reached a market cap of over $12 billion in just 48 hours. Its descent was equally fast, and the market cap had crashed to near $3 billion by early this month, data from Coingecko show.

What’s interesting is that the total crypto market capitalization remained largely unchanged at nearly $3.5 trillion during the boom-bust cycle. That’s a sign the memecoin did little to draw new capital to the market. In other words, the money simply migrated from BTC, Solana’s SOL and other coins.

Moreover, while some wallets that invested early made big money, around 800,000 lost a total of $2 billion by selling at a loss or holding as prices crashed, according to Chainalysis.

Something similar played out during the LIBRA fiasco early this month, which destroyed $251 million in investor money and became a net wealth-destroyer for the crypto market.

That’s probably why Abraxas Capital Management founder Fabio Frontini said memecoins should be banned. He was speaking during a rapid-fire round at the “Views from Wall Street to Crypto” session at Consensus.

Jason Atkins, chief commercial officer at Auros, said the fact that memecoins are sucking out liquidity from the other sectors of the market shows how fragile the liquidity pool is.

“It’s clear that adoption is still at an early stage,” Atkins said in an interview. “The number of participants remains relatively low, and the fact that one high-profile token launch can send shockwaves across the entire market shows how fragile the liquidity pool is. It’s a clear signal that the broader market lacks sufficient depth and stability.”

Those are key requirements for attracting more institutional interest, he said.

“Institutional investors are actively exploring how they can engage with this space. But they are cautious. They need to see a more mature, stable market that can handle larger volumes without getting disrupted by speculative, meme-driven activity.”

Bitcoin’s direction

Opinions were mixed on what happens next for the BTC price.

Several Consensus delegates said the meme frenzy and the uncanny stability in BTC is unhealthy. Such range plays often end with a downside move, they said. That’s what happened in 2018, when the consolidation ended with a sharp decline.

On the other hand, the memecoin saturation is overshadowing positive news on the regulatory front, Wintermute’s Gaevoy said.

“People don’t necessarily appreciate that we have a lot of positive news coming. For example, on the regulatory side, we have all forgotten how bad of an influence the SEC and even CFTC was for the last few years and now that overhang is completely gone. I don’t think it’s being properly priced, So I’m pretty optimistic,” Gaevoy said.

Altcoin ETFs?

The regulatory environment includes change of U.S. administration and exit of Gary Gensler from the Securities and Exchange Commission.

A number of issuers have now filed SEC applications for spot exchange-traded funds (ETFs) tied to Solana’s SOL, XRP, dogecoin (DOGE) and litecoin (LTC).

To date, the regulator has approved only spot bitcoin and ether ETFs, assuming that the CME’s surveillance system for bitcoin and ether futures mitigates concerns about price manipulation. If CME futures are seen as a prerequisite to win approval for ETFs tied to digital assets, it’s worth noting the broader altcoins don’t have that privilege yet.

Gaevoy disagrees.

“It’s a relic from the previous SEC leadership. I would definitely not be surprised if Solana and other top 10 tokens excluding stablecoins are approved,” he said.

Germany’s Centre Right Alliance (CDU/CSU) managed to secure the most seats in the country’s parliamentary election on Sunday, suggesting a more innovation-friendly environment awaits.

Friedrich Merz’s CDU/CSU secured 28.52% of the vote while the far-right Alternative for Germany (AfD) secured 20.8% of the vote. There are 733 seats in the German Bundestag and no party secured a majority, so a coalition will be formed.

Mark Foster, European Union policy lead at the Crypto Council for Innovation, expects that the Centre Right Alliance will likely support the European Union’s approach to digital innovation, he told CoinDesk in an interview ahead of the election.

“So I don’t expect a massive change overnight from the previous government to the new government in terms of either digital assets policy or digital euro, but perhaps an openness and a willingness to think about how these solutions can possibly help improve the competitiveness of the German and the European economy and bring in some jobs and growth in competition, which is clearly the overarching principle at the moment and priority for the European Commission,” Foster said.

Germany’s election so far has had little impact on crypto. The country, which is the European Union’s largest economy, called an early election after its coalition between the Social Democrats (SDP), Free Democratic party (FDP) and Greens collapsed in November.

Though the country was late in passing legislation to enforce the European Union’s bespoke Markets in Crypto Assets legislation — passing legislation days before the mandated implementation date in December — it still managed to process MiCA licenses over the past couple of weeks. And Foster doesn’t expect there to be “any impact in terms of the day to day implementation of existing EU law,” moving forward.

Next the freshly elected members of parliament will need to vote for the country’s new chancellor and head of the federal government.

Solana-based token issuance platform Pump.Fun may soon be launching its own automated market maker (AMM), according to a URL connected to the site. However, there has been no public announcement yet.

AMM is a exchange system in crypto markets that makes trading easy by using a liquidity pool of usually, and at least, two tokens. Instead of matching buyers and sellers like a traditional exchange, smart contracts set the prices based on supply and demand and allow trades to be processed without a counterparty.

The “amm.pump.fun” shows a swap product in the making with a sell and buy option alongside a deposit and withdrawal function. That’s a first for Pump.Fun, which lets anyone issue a token for less than $2 in capital, after which they choose the number of tokens, theme, and meme picture to accompany it.

When the market capitalization of any token reaches $69,000, a portion of liquidity is deposited to the Solana-based exchange Raydium and burned (or when tokens are taken out of supply permanently).

Pump.Fun’s own AMM would mean tokens are no longer migrated to Raydium, or at least that’s what the market thinks, dampening sentiment for the latter’s RAY tokens. RAY is down 25% in the past 24 hours on the apparent development.

“It seems they are planning to have pump tokens graduate to their own pools instead of Raydium,” trader @trenchdiver101, who first flagged the development, said. “They can either extract more fees on Solana or have some mechanism to reward token holders.”

Though a part of Raydium’s total trading activity is derived from Pump.Fun tokens, the exchange supports several other top markets — such as Solana (SOL) to stablecoins and others — contributing to its $500 million in average daily trading volumes.

As such, the product could further bump the revenues and profits of Pump.Fun, which has no token but is among the most profitable crypto applications in the past year — a rare feat in a market where businesses heavily rely on token sales to generate income.

Pump.Fun has pocketed over $550 million in total fees since Mar.2024, data shows, with $2.4 billion in trading volumes over just the past two weeks. Over 8 million tokens have been issued on the platform since its 2024 launch, with a few, such as fartcoin (FART), reaching billions of dollars in market capitalization.

Deribit’s options market for Solana’s SOL token has become active, with whales engaging in bearish bets as the token’s price continues to decline ahead of an impending multi-billion dollar unlock.

Last week, SOL block trades totaling $32.39 million in notional value crossed the tape on Deribit, representing nearly 25% of the total options activity of $130.74 million. The remainder of the activity comprised screen trades, according to Amberdata. That’s the second-highest proportion of block trades to total activity on record.

A “block trade” in options refers to a significant, privately negotiated options transaction between two parties involving a large number of contracts. Such trades, typically associated with whale activity, are executed over-the-counter and outside the regular order book and then booked on the exchange, allowing for a minimal impact on the market prices.

Options are derivative contracts that give the purchaser the right but not the obligation to buy or sell the underlying asset, in this case, SOL, at a preset price on or before a specific date. A call option gives the right to buy, while a put option provides the right to sell. On Deribit, which accounts for over 85% of the global crypto options activity, one options contract represents 1 SOL.

Last week’s spike in SOL block trades featured a preference for put options, which traders use to hedge against or profit from a potential price slide.

“Nearly 80% of the block-trade volume was concentrated in put contracts. Compared to only 40% puts for BTC and 37.5% puts for ETH during the same timeframe,” Greg Magadini, director of derivatives at Amberdata, said.

The whale demand for put options comes as SOL’s outlook appears grim following the 46% price slide to $160 in just over five weeks. The activity on the Solana blockchain, which became a go-to-place for memecoin traders last year, peaked with the launch of the TRUMP token on Jan. 17, three days before Donald Trump was inaugurated as the President of the U.S.

Since then, the number of daily transactions on Solana and the cumulative daily volume on the Solana-based decentralized exchanges has declined significantly, according to data source Artemis. That has weakened the bullish case for SOL.

Plus, the impending SOL token unlock on Jan. 1 presents a significant headwind, per Deribit’s Asia Business Development Head Lin Chen.

“Solana (SOL) will have a major token unlock event on March 1, releasing 11.2 million SOL tokens, valued at approximately $2.07 billion. This represents 2.29% of the total supply. A significant portion of the unlock comes from the FTX estate and a foundation sale,” Chen said.

Chen explained that the large unlock could breed market volatility as it accounts for nearly 59% of SOL’s daily spot trading volume. Hence, its natural to see a lot of hedging flow in put options in anticipation of a potential extended SOL price slide.

“Many traders would also take this opportunity to long Vol[atility] to generate good yield,” Chen noted.

Bybit has returned to a 1:1 backing of client assets and has fully closed the “ether gap” it faced after an unprecedented $1.4 billion hack hit the exchange late Friday.

The exchange has received 446,870 ether (ETH), worth $1.23 billion at current prices, through loans, large deposits, and ether purchases in the past two days, on-chain tracking service Lookonchain said in an X post on Monday.

Address activity suggests more than $400 million were purchased through over-the-counter trading, with another $300 million brought directly from exchanges. Nearly $300 million were sought as loans; the rest are from addresses apparently belonging to crypto funds.

ETH prices rose upto 4% over the weekend amid the apparent buying activity, but are down 2% in the past 24 hours as sentiment isn’t fully lifted.

Meanwhile, Bybit said late Sunday that all deposit and withdrawal activity had “fully recovered to normal levels — with total deposits “slightly exceeding” withdrawals as on Saturday in a sign of market confidence.

Friday’s attack targeted one of Bybit’s offline “cold” wallets, which are typically considered secure due to their lack of internet connectivity, in a heist that allowed $1.4 billion in ETH to be withdrawn.

Hackers gained control by exploiting a sophisticated method involving a manipulated user interface (UI) and URL. This allowed the attackers to alter the smart contract logic, redirecting the funds to an unidentified address. The stolen assets were then split across multiple wallets and swapped on decentralized exchanges.

Blockchain sleuth ZachXBT linked the hack to North Korea’s Lazarus Group, a state-sponsored hacking collective notorious for crypto thefts. Lazarus was behind several high-profile crypto attacks, including the $600 million Ronin Network hack in 2022, and a $230 million drain on Indian exchange WazirX in 2024.

On Friday, cryptocurrency exchange Bybit was allegedly hacked by North Korea’s Lazarus group, which drained nearly $1.4 billion in ether (ETH) from the exchange.

Following the hack, Arthur Hayes, BitMEX co-founder and claiming to be a major ether (ETH) holder, wrote a post on X to Ethereum co-founder Vitalik Buterin on whether he will “advocate to roll back the chain to help @Bybit_Official.” Meanwhile, in an X spaces session, Bybit’s CEO Ben Zhou revealed that his team had also reached out to the Ethereum Foundation to see if it was something the network would consider, noting that such a decision should be based on what the network’s community wants.

Hayes’s post immediately provoked a fierce reaction from the Ethereum community, which was firm in its belief that it wouldn’t happen. Some even questioned whether the BitMEX founder was joking. CoinDesk reached out to Hayes over X to clarify his comments.

Ethereum members, like the core developer teams, are vastly against “rolling back” the network because it would override core elements of decentralization. If Buterin decided on his own that it would happen, then that would be seen as the end of Ethereum’s ethos, which heavily involves various developer teams and other community members when it comes to the health and state of the blockchain.

“Rolling back the chain would give ETH no purpose. What’s the point if you can just change rules,” said user @the_weso in a post on X.

Some outside the Ethereum community pointed to the 2016 DAO hack as an example when $60 million in ETH was stolen. The network went forward with a hard fork, splitting the old network into two, and the new chain continued on as Ethereum.

That hard fork was not a “rollback,” though; it was known as an “irregular state transition.” Ethereum technically can’t “roll back” the network because it relies on an account model, where accounts hold users’ ETH.

At the time of the hack, developers upgraded their nodes to a new client or software. Those who didn’t upgrade their nodes were still on the old chain, which became known as Ethereum Classic.

When the nodes upgraded to the new software, the stolen ETH could move from one Ethereum account address to the next.

“The ‘irregular state change’ that they implemented at the time of the DAO hard fork was this: they airlifted all the ETH in the DAO smart contracts out to a refund contract that would send you 1 ETH for every 100 DAO tokens you sent in,” wrote Laura Shin of Unchained in a post on X.

Read more: Arthur Hayes Floats the Idea of Rolling Back Ethereum Network to Negate $1.4B Bybit Hack, Drawing Community Ire

Major cryptocurrency exchange Bybit has seen total outflows of over $5.5 billion after it suffered a near $1.5 billion hack that saw hackers, believed to be from North Korea’s Lazarus Group, drain its ether cold wallet.

The total assets tracked on wallets associated with the exchange plunged from around $16.9 billion to $11.2 billion at the time of writing, according to data from DeFiLlama. The exchange is now looking to understand exactly what happened.

In an X spaces session, Bybit’s CEO Ben Zhou revealed that shortly after the incident, he called for “all hands on deck” to serve their clients with processing withdrawals and responding to inquiries about what was going on.

During the session, Zhou revealed that the security breach saw the hackers make off with roughly 70% of their clients’ ether, which meant that Bybit needed to quickly secure a loan to be able to process withdrawals. Yet, Zhou found that ether wasn’t the most withdrawn token, with most users instead withdrawing stablecoin from Bybit.

The exchange, Zhou noted, has reserves to cover these withdrawals, but the crisis deepened as, in response to the incident, Safe moved to temporarily shut down its smart wallet functionalities to “ensure absolute confidence in our platform’s security.”

Safe is a decentralized custody protocol providing smart contract wallets for digital asset management. Some exchanges integrated Safe, which allows users to maintain custody of their funds and has multisig functionality to enhance the security of their cold wallets.

While the exchange had reserves to back up users’ withdrawals, $3 billion worth of USDT was in a Safe wallet that had just been shut down as the wallet moved to understand the situation, according to Zhou.

On social media, Safe said that while it had “not found evidence that the official Safe frontend was compromised,” it was temporarily shutting down “certain functionalities” out of caution.

While Zhou and Bybit’s team were figuring out how to securely withdraw their $3 billion, withdrawals were mounting. Within two hours of the security breach, the exchange was facing requests to move over $100,000 off its platform, Zhou revealed.

Responding to the situation, Zhou told his security team to engage Safe to “find a better way to get this money out.” The team ended up developing new software with code “based on Etherscan” to verify the signatures “on a very manual level” to move the stablecoins back to their wallet and cover the withdrawal surge.

The exchange’s team had to remain up all night to be able to fulfill withdrawals, according to Zhou. As the exchange managed to move the $3 billion in stablecoin reserves, it was facing a bank run of “about 50%” of all the funds within the exchange.

Zhou said that since the incident, the exchange has moved a significant amount of funds off of Safe cold wallets and is now determining what system it will use to replace Safe.

Pushing to “Roll Back” Ethereum Was not Off the Table

Since the security breach, Bybit has engaged authorities. During the session, Zhou said that the Singaporean authorities took the issue “very seriously” and that he believes it has already been escalated with Interpol.

Blockchain analysis firms, including Chainalysis, were engaged. Zhou said, “As long as Bybit is there and continues to track [the stolen ether], I hope we can get these funds back.”

Notably, he revealed that pushing to “roll back” the Ethereum blockchain, which was suggested by some industry players on social media, including BitMEX co-founder Arthur Hayes, had been on the table for some time if the community agreed with it.

“I had my team talking to Vitalik and the Ethereum Foundation to see if there’s any recommendations they can offer to help. I do really thank all these guys on Twitter asking if there is a possibility to roll back the chain. I’m not sure what was the response on their side, but anything that would help we would try,” Zhou said.

When asked if “rolling back” the chain is even possible, Zhou responded he doesn’t know. “I’m not sure it’s a one-man decision based on the spirit of blockchain. It should be a work in process to see what the community wants,” he said.

It’s worth noting that a blockchain “rollback” refers to a state change that would allow for the funds to be recovered. While rolling back the Bitcoin blockchain is technically possible, such a state change on Ethereum would be more complex, given its smart contract interactions and state-based architecture.

Nevertheless, any state change would require consensus and likely lead to a contentious hard fork, drawing criticism from the community. This would likely split the Ethereum blockchain into two networks, each with its own supporters.

As for what exactly caused the hack to occur, is still unclear. Per Zhou, Bybit’s laptops have not been compromised. He said the movements of the transaction’s signers have been scrutinized but appear to have been routine.

“We know the cause is definitely around the Safe cold wallet. Whether it’s a problem with our laptops or on Safe’s side, we don’t know.,” Zhou added.

A vast majority of Latin American cryptocurrency users—95%—plan to expand their holdings in 2025, according to a Binance Research survey of more than 10,000 investors in Argentina, Brazil, Colombia, and Mexico.

The findings show that 40.1% of respondents are expecting to buy more crypto within the next three months, 15.3% are looking to do so in the next six months, and 39.7% within 12 months. Only 4.9% have no plans to keep on investing this year.

Latin America led the world in crypto adoption in 2024, growing by 116%, according to research from payments firm Triple-A quoted in the report. The region now has 55 million cryptocurrency users, making up nearly 10% of total cryptocurrency users.

This rapid expansion has been fueled by rising asset prices, regulatory advancements, and new financial products like spot bitcoin exchange-traded funds (ETFs). Brazil has just last week become the first country to approve a spot XRP ETF.

Market performance has also bolstered investor confidence. “Latin America is a rapidly expanding region for the crypto sector, and the results of this research reinforce what we have observed in our operations,” Binance’s regional VP for Latin America, Guilherme Nazar, said.

Binance’s research shows that half of those inquired already use cryptocurrencies for over a year, with most entering the space expecting significant returns and searching for financial freedom.

Portfolio diversification, privacy, and protecting their money were also quoted as motives to invest in the space.
Read more: How a $115M Crypto Fund With Big Ambitions Plans to Invest In Latin America

The price of the world’s second-largest cryptocurrency, ether (ETH), has risen by more than 2.3% in the last 24 hours, while the broader CoinDesk 20 Index has risen by just 0.76% during the same period. Bitcoin is down around 0.3%.

The rise comes amid reports that Bybit, the cryptocurrency exchange that was hacked for $1.5 billion worth of ether and staked ether by North Korean hacking group Lazarus, has moved 100 million USDT into new addresses and moved half of that into addresses to purchase 36,900 ETH over-the-counter.

The funds, worth around $101 million, were then moved to addresses tagged as belonging to the cryptocurrency exchange, crypto journalist Colin Wu reported, citing, Arkham Intelligence data.

Bybit’s CEO Ben Zhou reportedly said in an “ask me anything” session that the company’s assets are “far greater than $1.5 billion,” adding that “there is a cold wallet in safe with nearly 3 billion US dollars in USDT,” according to the same source.

Bybit’s hacker is now holdings an estimated 489,000 ETH valued at approximately $1.34 billion, around 0.4% of ether’s total supply, which makes it the 14th-largest holder of the cryptocurrency.

The addresses associated with the hacker are now closely monitored in the space and are blacklisted by major cryptocurrency exchanges.

“The stolen funds have already been marked, making it extremely difficult for the hacker to use them. Any attempt to transfer these funds to a major exchange would result in an immediate block,” StealthEX CEO Maria Carola told CoinDesk.

Since the hacker may not be able to use the funds in any way, some analysts are suggesting that the 0.4% of the ETH supply it holds is “essentially gone.”