Last week, Bybit suffered a serious hacker attack, losing approximately $1.3 billion worth of Ethereum (ETH). According to market news and subsequent developments, this incident had a certain impact on the price of ETH, characterized by an initial drop followed by a rise, but the increase was limited. The following is an analysis of this incident, focusing on the impact of the hacker attack on the price of ETH, the possibility of Bybit using its own funds to buy back ETH, and its potential role in the market.
The hacker attack and its direct impact on the price of ETH
After the hacker attack, Bybit lost approximately 401,300 ETH (estimated at about $1.3 to $1.5 billion at the time, with specific amounts varying by report). Such a large-scale theft usually causes market panic, as investors worry that the stolen ETH may be sold off quickly, increasing market supply pressure. This expectation often triggers a price drop.
In fact, after the attack was exposed, the price of ETH did drop, reportedly from about $2845 to $2614, a decline of about 8%. This reaction aligns with the typical market expectation of significant security incidents: increased uncertainty leads investors to sell off to avoid risk.
However, the decline did not continue to expand, and the price subsequently rebounded, partially recovering to above $2800. This may be related to the following factors:
The speed at which the market digests news: After the attack, Bybit quickly publicized the incident and committed to ensuring the security of user assets, which reduced the spread of panic selling.
Hacker selling is restricted: If the stolen ETH is sold off quickly, it may further depress prices. However, due to the transparency of the blockchain, the relevant addresses may have already been flagged, and exchanges and stablecoin issuers (such as Tether and Circle) may freeze some of the funds, limiting the hacker's ability to sell. For example, reports indicate that about $42.85 million of the stolen funds have been frozen by multiple exchanges.
External support: Other exchanges provided emergency funding support to Bybit, enhancing market confidence and alleviating withdrawal pressure.
The possibility of Bybit using its own funds to buy back ETH
Market rumors suggest that part of the reason for the rebound in ETH prices is that Bybit used its own funds to buy back ETH in the open market to cover losses and maintain solvency. This claim has some validity, but it needs to be analyzed in conjunction with specific circumstances.
Bybit emphasized in its statement that customer assets will be 100% guaranteed, and its total assets under management (AUM) exceed $20 billion, enough to cover losses. Additionally, Bybit obtained a bridge loan worth about 80% of the stolen ETH, which means it may not need to buy back ETH on a large scale in the short term.
However, in order to restore reserves (especially ETH reserves) to pre-hack levels, Bybit may indeed need to replenish its ETH inventory. This replenishment can be achieved through market purchases rather than relying solely on loans or its own stablecoin reserves (such as USDT).
Reports indicate that Bybit transferred 100 million USDT to a new address after the attack and used half of it to purchase approximately 36,900 ETH (worth about $100 million). This indicates that Bybit indeed bought back some ETH in the market, but the scale is far below the 400,000 ETH stolen, accounting for only about 9% of total losses. This purchase may explain the short-term rebound in price, but it is insufficient to drive a significant increase.
Market impact: If Bybit continues to buy back ETH on a large scale (for example, close to 400,000), it would theoretically significantly reduce the circulating supply and drive prices up. However, the current total supply of ETH is about 120 million, with the stolen 400,000 accounting for only 0.33%. Even if Bybit buys back all of it, the impact on the overall supply-demand balance would be relatively limited. Furthermore, the market's expectations of Bybit's buyback behavior may have already been factored in, leading to a mild price reaction.
Reasons for limited increase in ETH price
Although the price of ETH has rebounded slightly after the decline, the increase is not significant (as of February 23, the price hovers around $2800, only slightly higher than pre-attack levels). The reasons behind this may include:
Market sentiment is cautious: This attack is considered the largest single theft in the history of cryptocurrency, involving the Lazarus group. Despite Bybit's commitment to compensation, investors still have doubts about the security of centralized exchanges, which suppresses buying enthusiasm.
The uncertainty of the hacker's fund movements: The stolen ETH is currently controlled by the hacker (about 489,000, worth about $1.3 billion). If they gradually sell it off through mixers or other means, it may exert ongoing pressure on the price. Current regulations on mixing services (such as TornadoCash being sanctioned) may slow down this process, but the risk still exists.
Macroeconomic factors: The price of ETH is influenced not only by the Bybit incident but also by broader cryptocurrency market trends (such as Bitcoin price fluctuations, macroeconomic policies, etc.). At the time of the attack, the overall market was not in a strong upward cycle, limiting the rebound potential of ETH.
Future outlook and potential impact
In the short term: If Bybit continues to buy back ETH on a small scale, it may provide some support for the price, but it is difficult to trigger a significant increase. Conversely, if the hacker begins to transfer or sell the stolen funds, it may put pressure on the price again. Bybit has launched a $140 million bounty program (10% of recovered funds), and if part of the ETH is successfully recovered, it may further stabilize market confidence.
In the long term: This incident exposes the vulnerability of centralized exchanges' cold wallet security and may prompt the industry to strengthen security measures (such as improvements to multi-signature wallets). At the same time, discussions about whether to roll back the Ethereum blockchain (although technically infeasible) reflect the community's concern about the severity of the incident. If similar incidents recur, it may have a more profound impact on the trust and price of ETH.
Conclusion
The Bybit hacker attack led to a drop in the price of ETH followed by a rise, but the increase was limited. This trend is related to the rapid stabilization after market panic. Bybit's use of its own funds to buy back ETH may indeed have driven part of the rebound, but its scale is limited (about 36,900 ETH), insufficient to explain all price movements. The larger impact may come from the restored confidence in Bybit's solvency and the limited selling by hackers. In the future, the price trend of ETH will depend on Bybit's funding strategy, the hackers' behavior, and the overall market environment, and may maintain a fluctuating pattern in the short term.