Bybit Regains 7% Market Share Post-Hack With Strategic Liquidity Tools

Bybit, a prominent cryptocurrency exchange, has demonstrated a remarkable recovery following a significant cyber attack in February 2025. The exchange's market share, which had plummeted from approximately 10% in January to 4% post-hack, has since rebounded by 7%. This recovery is attributed to strategic liquidity tools and a broader market recovery, despite the uncertainty caused by the cyber attack.

The exchange's rollout of a Retail Price Improvement (RPI) order played a pivotal role in its recovery. This order provided better liquidity and tighter spreads for retail traders, allowing them to resume normal Bitcoin and Ethereum trading more quickly. The RPI order is designed to offer retail traders better pricing and liquidity by limiting matchings to only retail traders, which helped stabilize liquidity and regain market share faster than competitors.

Despite the temporary dip in spot volume post-hack, Bybit's ability to stabilize liquidity rapidly enabled it to regain market share faster than competitors. This recovery came amidst a broader trend of “macro de-risking” across global markets, which had already started before the hack. The broader market recovery helped mitigate the impact of the hack on Bybit, enabling a faster recovery in its market share.

The Bybit hack, the largest crypto theft to date, exposed a major weakness in Web3. Its dependence on Web2 infrastructure for key functions like authentication and storage. This dependency exposes seemingly secure decentralized systems to traditional cybersecurity threats. In Bybit’s case, attackers breached Safe Wallet’s AWS infrastructure, injecting malicious JavaScript into critical files controlling wallet functions. This breach represents a recurring problem, as similar patterns have emerged across platforms. The BadgerDAO hack, which similarly exploited Web2 infrastructure, demonstrates how systemic vulnerabilities persist in Web3.

Sophisticated attacks targeting Web2 components, such as Cloudflare API keys, prove that as long as Web3 platforms continue relying on centralized systems, they remain exposed to such threats. Bybit’s decision to shut down its NFT and Initial DEX Offering (IDO) services following the devastating security breach further shows the risks associated with crypto’s continued dependence on Web2 infrastructure. The discontinuation, effective April 8, 2025, is seen as part of the platform’s effort to streamline its offerings amid increasing regulatory scrutiny and security concerns. This move also reflects a broader trend of declining market activity in the NFT space, with several platforms shutting down their NFT operations due to decreased trading volumes and financial challenges.

Bybit’s recovery highlights the resilience of established cryptocurrency exchanges in the face of security challenges. The exchange's strategic focus on offering deeper liquidity and better spreads for retail traders has accelerated its recovery and enhanced its retail dominance over other centralized exchanges (CEXs). Despite the hack, small to mid-cap altcoins maintained strong trading volume, indicating that the broader market remained resilient. The hack’s impact on Bybit was mitigated by broader global events, enabling a faster recovery in Bybit market share. This event underscores the importance of strategic adaptations and liquidity management in navigating the vulnerabilities of Web3 infrastructure.