Bybit's Response to $1.4 Billion Hack Demonstrates Crypto Market Resilience

Bybit, the world’s second-largest cryptocurrency exchange, has been highlighted in a new research report by Glassnode, a leading onchain market intelligence provider. The report, titled Digital Asset Market Resilience: A Deep Dive into the Bybit-Lazarus Hack, examines the exchange's response to the Lazarus hack in February 2025, which resulted in a loss of $1.4 billion. The report benchmarks this event against major disruptions in both digital asset and traditional financial markets, showcasing the industry's evolving resilience.

The report analyzes the timeline, trading activity, and critical market data following the hack. It reveals that Bybit's swift operational response, transparent communication, and strong internal controls prevented a potential crisis from spiraling out of control. The exchange's deep liquidity, a key competitive advantage, was initially challenged as bid-ask spreads widened and market depth contracted. However, both metrics showed steady recovery, with bid-ask spreads returning to near pre-incident levels and market depth surpassing pre-hack values by May.

The report also examines the performance of three key assets traded on Bybit: BTC, ETH, and SOL. A day after the hack, ETH open interest experienced a severe contraction due to widespread position unwinding and forced deleveraging. However, over the following two months, open interest changes turned predominantly positive, with most values returning to long-term averages. Both BTC and SOL followed a similar pattern, with all three assets restored to pre-hack levels by the time of the report's publication. BTC reached a new high in futures perpetual open interest at $8.5 billion, while SOL hit $1.2 billion.

The report attributes the prevention of market spillover to Bybit’s operational stability, which was assessed using a proprietary model based on two key indicators: Internal Reshuffling Ratio and Whale Withdrawal Ratio. Both metrics showed a period of post-hack spikes before returning to normal levels. The report concludes that Bybit's response to the Lazarus hack marks a pivotal shift in crypto’s capacity to absorb major disruptions, potentially transforming investor confidence and accelerating industry maturation.

The report adds to growing analytical literature on the historic hacking incident, whose aftermath demonstrated the industry’s evolving resilience by avoiding systemic collapse seen in previous crises. Bybit not only contained potential market-wide damage but saw key assets reach new trading records, proving institutional-grade practices are now embedded in digital asset markets. This incident heralds a new era of digital asset market resilience, where the industry can withstand major disruptions without cascading into industry-wide panic and systemic pressure.