New Glassnode Report Highlights Bybit's Resilience Post-Lazarus Hack Crisis

New Insights on Bybit's Resilience Against the Lazarus Cyberattack

In a recent report by Glassnode, one of the most reputable providers of on-chain market insights, the analysis of Bybit's response to the infamous Lazarus hacking incident has surfaced as a defining moment for the cryptocurrency industry. Bybit, currently recognized as the second-largest cryptocurrency exchange globally by trading volume, faced the most unprecedented cyberattack in February 2025, resulting in a staggering $1.4 billion theft. The incident has become a touchstone for evaluating the resilience and operational robustness of cryptocurrency exchanges in times of crisis.

Overview of the Cyberattack

The Glassnode report, titled "Market Resilience: A Detailed Analysis of the Lazarus Attack on Bybit," delves into detailed timelines of events, trading activity, and key market indicators surrounding the cyberattack. The report draws parallels with prior significant market disruptions both in traditional financial systems and the cryptocurrency landscape, ultimately revealing a critical turning point towards an era of fortified market resilience.

When the Lazarus group executed its cyberattack, the immediate aftermath saw a plummet in open contracts on Bybit. Particularly, Ethereum (ETH) experienced one of the most steep declines in its history as traders scrambled to close positions, fearing further losses. However, what followed has been noteworthy; within two months, open position metrics across ETH, Bitcoin (BTC), and Solana (SOL) exhibited robust recovery trends, demonstrating a resurgence towards long-term averages, and in some instances, exceeded historical volatility thresholds.

Trading Volumes and Market Sentiment

The report highlighted the trading behavior on Bybit after the attack. On the day following the hack, February 22, open contracts for ETH faced massive declines dominated by forced liquidations. Contrary to expectations, in the months following the attack, both BTC and SOL mirrored ETH's recovery pattern. By May, trading levels had returned to pre-attack statuses, with BTC achieving a remarkable record of $8.5 billion in open contracts and SOL hitting $1.2 billion. The renewed momentum illustrated a robust response in trading volumes, with Bybit setting an impressive daily trading record of $8.5 billion in futures—an extraordinary feat considering the circumstances.

Liquidity and Market Conditions

Liquidity, a hallmark feature of Bybit's market offering, faced its own test during this turmoil. Initially, the depths of the market shrank, and bid-ask spreads widened significantly due to the collective step back from market participants, driven by increased uncertainty. Bybit processed a record-breaking 350,000 withdrawals within the first 12 hours following the breach, indicative of the urgent shifts in trader confidence.

However, as conditions normalized, by mid-April, both liquidity indicators improved. Bid-ask spreads reverted to levels akin to those before the cyberattack, and by May, the market depths exceeded pre-attack values, signifying restored confidence and market stability.

Averting a Financial Crisis

Unlike anticipated systemic breakdowns that could have pervaded the entire cryptocurrency industry, the consequences of the Lazarus attack merely resulted in a temporary dip in Bybit's liquidity. The Glassnode report introduced proprietary models assessing Bybit's operational stability based on critical indicators: the Internal Shakeout Ratio and Whale Withdrawal Ratio. Following the attack, both metrics registered surges before stabilizing back to normative levels, showcasing Bybit's effective crisis management.

The report concluded that Bybit's ability to thwart potential chaos in the market can be attributed to rapid operational responses, transparent communication, and stringent internal controls. This action not only safeguarded client funds but also preserved the integrity of Bybit's platform, staving off a potential industry-wide fallout.

Conclusion

The insights provided by Glassnode equip the cryptocurrency sphere with significant reflections on managing crises, particularly in the wake of notable events that have induced systemic failures in the past like the FTX and Terra collapses. Bybit not only contained the fallout from this major cyber incident but emerged with increased trading activity in key digital assets, signifying a paradigm shift in the industry's approach to operational resilience. This transformative moment can contribute to altering investor confidence and hastening the maturation of the digital asset market.

For further insights, visit Glassnode Insights.

Bybit continues redefining the trading experience, bridging the gap between traditional finance and decentralized finance. Learn more about their services at Bybit.com.