Degen Digest: February 26, 2025
Bybit’s $1.4B hack shakes the crypto market, while BTC plunges despite MicroStrategy’s buying spree. Read the latest Degen Digest for key market insights.
Feb 26, 2025
TL;DR
- Bybit hacked: $1.4B stolen via UI manipulation, linked to Lazarus Group.
- Bitcoin drops: MicroStrategy buys 20K BTC, but demand remains weak.
- MSTR risk: Concerns grow over its BTC strategy, drawing LUNA comparisons.
- Market outlook: BTC may drop to $82K–$78K before stabilizing.
Bybit Exploit: How Hackers Stole $1.4 Billion
On February 22, 2025, one of the largest crypto exchanges, Bybit, suffered a massive exploit, allegedly orchestrated by North Korea’s Lazarus Group. This attack marks one of the most significant crypto hacks in history, totaling ₩2 trillion ($1.4 billion) in stolen assets. But how did hackers manage to exploit a multi-signature cold wallet, generally considered one of the safest storage methods?
How the Hack Unfolded
- February 19: Hackers deployed a malicious smart contract from the address
0xbDd077f651EBe7f7b3cE16fe5F2b025BE2969516, setting the stage for the attack.
- February 21: Bybit, following its routine cold-to-warm wallet fund transfers, unknowingly executed a compromised transaction.
- Attack Method: Instead of directly breaching the multi-signature wallet, hackers manipulated the user interface (UI)—a form of social engineering. When Bybit employees approved transactions via hardware wallets (possibly Ledger), the on-screen addresses seemed legitimate, but the funds were actually redirected to hacker-controlled wallets.
Aftermath & Recovery Efforts
Blockchain investigator ZachXBT was the first to flag the suspicious withdrawals, revealing that 401,347 ETH ($1.46 billion) had been drained from Bybit. Shortly after, Bybit CEO Ben Zhou confirmed the breach, assuring users that:
- Only ETH in the affected cold wallet was compromised.
- Withdrawals were temporarily delayed due to overwhelming requests.
- All user funds remained fully backed at a 1:1 ratio.
To recover from the loss, Bybit secured emergency loans from exchanges and venture capital firms, quickly replenishing the stolen ETH. As a result, withdrawals resumed, preventing a FTX-style collapse.
Market Impact: USDE Depegging & Fears of Another LUNA Moment
The hack triggered immediate market panic, particularly impacting $ENA, a token closely associated with Bybit. Its stablecoin, USDE, briefly lost its peg but was swiftly re-stabilized following rapid intervention from the $ENA team.
While the situation was contained, the sheer scale of the hack—comparable to the LUNA and FTX crises—served as a stark reminder of crypto’s lingering security vulnerabilities.
Bitcoin’s Breakdown: Why BTC is Crashing
The crypto market experienced a sharp decline as Bitcoin (BTC) broke its long-held price range, leaving many traders scrambling for answers.
MicroStrategy’s BTC Buying Frenzy Backfires
On February 24, as the market began recovering from the Bybit hack, MicroStrategy (MSTR) disclosed a massive BTC purchase. The company had been accumulating 20,000 BTC over a week, preventing BTC from falling further. However, this aggressive TWAP buying masked a critical issue:
- Despite the large buy orders, BTC’s price remained stagnant, struggling to break the $100K resistance.
- ETF outflows continued, and retail buying interest was minimal.
- Whales and institutional traders hesitated to enter the market, fearing further downside.
Nasdaq Correlation & Institutional Exit Signals
Adding to Bitcoin’s woes, Nasdaq futures hit a double top at 22,200, followed by a sharp daily decline. Historically, BTC has mirrored Nasdaq’s movements, but in this instance, it failed to keep pace with the stock market’s rally, signaling weak buying pressure.
- Following MicroStrategy’s BTC purchase disclosure, traders realized that MSTR was the only major buyer, raising concerns over the sustainability of its strategy.
- Some investors compared MSTR’s BTC-heavy balance sheet to the flawed USTC-LUNA model, where unsustainable accumulation led to collapse.
Is MicroStrategy’s BTC Strategy a Ticking Time Bomb?
MicroStrategy has a history of aggressively accumulating BTC, even issuing convertible bonds and new stock offerings to fund its purchases. While this strategy has worked in bull markets, many analysts now question its long-term viability, especially if BTC experiences another major correction.
Some market participants believe that MSTR is artificially propping up BTC to avoid being delisted from Nasdaq 100 and S&P 500—a scenario eerily reminiscent of the Dot-Com Bubble, where MicroStrategy’s stock collapsed from $330 to $0.50.
BTC Price Outlook: Prepare for More Downside?
At the time of writing, BTC’s freefall has temporarily paused, but caution is warranted. Many traders are now eyeing the $82K–$78K range as the next potential support zone.
Key Takeaways: What Traders Should Do Now
- Crypto Security is Non-Negotiable
- Even top-tier exchanges like Bybit can be hacked. Always use hardware wallets, multi-signature security, and never trust UI prompts blindly.
- BTC’s Downtrend Isn’t Over Yet
- If you’re trading with leverage, avoid trying to catch the absolute bottom. Wait for confirmation of trend reversal before re-entering the market.
For more insights on DEX trading patterns, crypto market liquidity, and institutional investment trends, check out our latest analysis on the SnapX Blog.
Share article
Subscribe to our newsletter.
