Crypto in February 2025: The Bybit Hack and a Brutal Sell-Off
2025-03-01
If January was euphoria, February was the hangover. The month delivered the largest crypto theft in history, a memecoin scandal that reached a head of state, and one of Bitcoin's worst Februaries on record. Here is how it played out.
The Largest Hack Ever
On February 21, Bybit was drained of roughly 401,000 ETH -- about $1.4 billion at the time -- in what is now the largest crypto theft ever recorded. The attackers compromised a developer machine and injected malicious JavaScript into the Safe{Wallet} signing interface, tricking signers into approving a transaction that handed over a cold wallet. On-chain investigator ZachXBT flagged North Korea's Lazarus Group within hours, and the FBI later confirmed the attribution.
The episode was a stark reminder that the weakest link is rarely the chain itself -- it is the human and software surface around custody. The forced selling of stolen ETH also amplified weakness across the market.
Argentina's "Cryptogate"
A week earlier, on February 14, Argentine President Javier Milei posted an endorsement of the $LIBRA token. It spiked more than 2,000% within about 40 minutes to a ~$4.5 billion market cap, then collapsed almost as quickly. Insiders cashed out around $100 million while ordinary buyers absorbed losses estimated near $250 million, triggering a federal fraud investigation. It was a textbook insider rug -- and a second high-profile warning in two months about who really profits from celebrity tokens.
Bitcoin's Worst February in Years
Macro fears around incoming tariffs, the Bybit shock, and record spot-Bitcoin-ETF outflows combined to drag Bitcoin from around $100,000 to briefly below $80,000 by month-end. Ethereum fared worse, sliding toward the $2,200-$2,500 zone. After January's record, the reversal was swift and broad.
One Bright Spot for the Industry
On February 27, the SEC filed to dismiss its long-running enforcement action against Coinbase, signaling the agency's pivot away from Gensler-era "regulation by enforcement." It was cold comfort against the price action, but structurally important for the year ahead.
The Takeaway
February was a risk-management month. Custody security, position sizing, and respecting downside volatility mattered far more than picking the next narrative. Our models leaned defensive as ETF flows turned negative -- exactly the kind of regime shift worth quantifying rather than guessing. See current signals on our forecasts dashboard.