On February 21, 2025, Bybit suffered a massive hack, losing approximately 400,000 ETH, valued at around $1.5 billion at the time. While the immediate impact was a market shock, a deeper analysis suggests that the aftermath may not be just a natural reaction. Instead, a series of coordinated liquidations and strategic short positions on major exchanges indicate potential market manipulation.
The Pattern: Bybit as the Trigger
Market data shows that liquidations consistently started on Bybit before spreading to other exchanges. This raises the question: Was this an organic reaction to the hack, or was Bybit deliberately triggering liquidations to recover losses?
The sequence of events follows a clear pattern:
1. Bybit initiates massive liquidations – A sharp drop in ETH price leads to forced liquidations of highly leveraged long positions.
2. Other exchanges follow suit – As Bybit’s prices drop, arbitrage bots and institutional players short BTC, ETH, and SOL on other platforms, amplifying the downturn.
3. Short positions dominate the market – Funding rates across exchanges turn deeply negative, indicating a large number of short positions in play.
4. Retail panic accelerates the drop – Fear spreads across social media, and retail traders panic-sell, further driving the price down.
Coordinated Market Manipulation?
The timing and sequence of events suggest that this could be more than just a random sell-off. If Bybit needed to recover stolen ETH, a potential strategy would involve:
Creating extreme downward pressure to liquidate overleveraged longs.
Accumulating ETH at much lower prices once liquidations have wiped out buyers.
Allowing a rebound (pump) once enough liquidity has been absorbed.
Given that major institutions and market makers often act in coordination, it is plausible that multiple players are benefiting from this controlled price movement.
What’s Next? The Reversal
With massive short positions in play, a reversal is inevitable. The key signals to watch for include:
A rapid reduction in open interest, signaling short positions closing.
A sudden spike in funding rates turning positive.
Increased buying volume from large wallets (whales accumulating).
Once these conditions align, a short squeeze could push prices up just as violently as they dropped.
Conclusion
The post-hack events surrounding Bybit suggest more than just a random market reaction. Instead, the data points toward a deliberate strategy of liquidation and accumulation, potentially orchestrated to recover lost assets. Traders should stay vigilant and watch for the key signals that indicate when the market is about to reverse.