The recent surge of Ethereum (ETH) hacks has had significant ramifications on the cryptocurrency market, particularly following the brazen theft orchestrated by the North Korean hacking group, Lazarus Group. On February 21, 2025, Bybit, one of the leading crypto exchanges, suffered a devastating breach, which resulted in the loss of over $1.44 billion worth of ETH.
Immediately following the hack, Bybit's Ethereum reserves plummeted from approximately 443,691 ETH to just 39,692 ETH. This dramatic drop sent shockwaves through the trading community, causing panic among investors and traders alike. Fearful of significant sell-offs by the hackers, many rushed to withdraw their funds or liquidate their positions, leading to uncertainty and volatility across the market.
Fortunately, there was some positive news just days later. By February 23, 2025, Bybit's reserves reportedly rebounded to over 200,000 ETH, signaling the exchange's efforts to restore liquidity and calm the jittery market sentiment. Traders closely monitored this recovery, as historically, similar upticks have marveled stability and price stabilization after security breaches.
Compounding the dilemma, Bybit’s netflow data reflected a turbulent aftermath. On February 21, netflows dropped sharply to -6.6K ETH, highlighting the immediate panic. Yet, by February 23, the tides began to shift back to positive territory, with increased inflows helping to offset previous withdrawals. The exchange's actions to stabilize its ETH reserves were seen favorably by traders and gave them limited comfort amid the pandemonium.
Nevertheless, Ethereum's market sentiment remains wholly mixed. Following the hack, funding rates for ETH turned negative, indicating heightened levels of selling and increased bearish pressure. With ETH struggling to exceed the $3,000 barrier, market participants were left to grapple with fluctuated price actions and fears of long-term declines.
Meanwhile, institutional traders appeared cautious yet strategically active. On February 24, Ethereum's CME futures open interest (OI) peaked at around $3.26 billion, coinciding with ETH prices near the $2,819.69 mark. This increase suggested speculative positioning among institutional clients, possibly hedging against potential price moves or prepping for volatility. Nevertheless, traders were quick to balance optimism with the anxieties surrounding the market's fragility.
The broader impact of the hacks became even clearer when considering the selling pressure exerted by the Lazarus Group. According to reports, the hackers now hold around 0.42% of ETH's total supply, becoming the 14th largest holders of the currency. Many market participants speculated about the potential ramifications of these holdings, fearing the hackers might flood the market with significant sell-offs should they choose to liquidate their positions.
Some analysts, though, presented opposing viewpoints. QCP analysts noted, "On-chain data shows funds from past hacks remain untouched, effectively creating their very own strategic reserve." They suggested the hackers typically hoard stolen tokens for years before laundering, minimizing immediate, random sell pressure on the market. Their insights aim to assuage fears and instill confidence among remaining investors.
Adding to this chaos of uncertainty, over the previous 24 hours, Ethereum experienced $72.85 million dollars worth of liquidations, with $59.71 million coming from long positions and $13.14 million from shorts. This rampant liquidation activity underscored the overall bearish trends dominating ETH's market performance.
Despite these challenges, ETH remains encapsulated within its long-term ascending price channel. While recent trading patterns indicate declines below important short-term resistance levels at $2,850, maintaining bullish structure may depend on how traders react to holding the lower boundary support backed by the 100-day SMA. If ETH can regain the $2,850 mark, there exists potential for upward momentum toward overcoming resistance.
Currently, indicators like the Relative Strength Index (RSI) and Stochastic Oscillator point toward bearish momentum, reinforcing the notion of sustained caution within the crypto community. A weekly candlestick close beneath the ascending channel's lower boundary may invalidate the bullish structure entirely, leaving investors to contend with the fallout. The dynamic interplay between fear, speculation, and recovery will shape the near-term outlook for ETH.
Overall, the situation remains precarious for Ethereum as traders tread cautiously within the current market dynamics. While Bybit's recovery efforts serve as promising indicators, the mixed sentiment and negative funding rates signal volatility might persist for some time. Investors will be keeping close watch for any shifts back toward stability or bullish catalysts to help drive future price movements.