Bitcoin Plunges Amid Bybit Hack and Rate Uncertainty

Bitcoin's price dipped to $95,610.2 on Monday, following a 1% decline last week, as investors remained cautious about the U.S. interest rate outlook after weak economic data. The downturn was exacerbated by a significant security breach at cryptocurrency exchange Bybit, where nearly $1.5 billion worth of Ethereum was stolen, intensifying negative sentiment in the crypto market.

Bybit suffered a major hack, with approximately 401,000 Ethereum stolen during a routine transfer from an offline "cold" wallet to an online "hot" wallet. This incident is considered one of the largest digital heists to date. Bybit's CEO, Ben Zhou, assured clients that their assets are secure and that the company remains solvent, with sufficient reserves to cover the losses. The exchange is collaborating with blockchain forensic experts to trace the stolen funds and has offered a 10% bounty for information leading to their recovery. In the aftermath of the breach, Bybit experienced a surge in withdrawal requests, processing over 350,000 transactions as customers reacted to the security lapse. The company acknowledged potential delays in processing these withdrawals due to the high volume.

Cryptocurrency investors are exhibiting increased caution due to uncertainties surrounding the Federal Reserve's interest rate trajectory. Recent data indicates a deceleration in U.S. business activity, with services PMI falling to 49.7 in February 2025 from 52.9 in January, signaling a contraction in the services sector. Additionally, Michigan's consumer sentiment index dropped to a 15-month low of 64.7 in February, down from 71.7 in January, with concerns over tariffs impacting consumer confidence. Meanwhile, the Federal Reserve has maintained its hawkish stance, emphasizing vigilance against potential inflationary pressures. This stance is influenced by factors such as sticky core inflation, and tariffs and government spending cuts, which could exacerbate conditions. The juxtaposition of a hawkish Fed and weakening economic indicators has led to increased volatility in financial markets, with cryptocurrency investors navigating this uncertainty as interest rate policies significantly influence risk asset valuations, including digital currencies.

Most altcoins fell in line with broader market movement amid a risk-off mood, but their declines were sharper compared to Bitcoin's. World no.2 crypto Ether fell 2.7% to $2