Feb 24, 2025: Our weekly Institutional Insights explores the latest market developments — market performance, industry news, exchange-traded fund (ETF) flows, trending topics, upcoming events and token unlocks — to help you supercharge your crypto trading.

 explores the latest market developments — market performance, industry news, exchange-traded fund (ETF) flows, trending topics, upcoming events and token unlocks — to help you supercharge your crypto trading.

Weekly Highlight — Mixed Economic Data Leads to Risk-Off Strategies

For the past two months, the strong U.S. economy has given investors confidence to invest in markets, even amidst looming tariffs and a stricter Federal Reserve Board. However, recent data indicates that this support may be weakening.

Last Friday, several reports on consumer sentiment, housing and services contributed to the S&P 500's largest loss of the year as it fell 1.7%, wiping out its weekly gains. In contrast, bonds experienced a rally, driving the yield on 10-year Treasuries down to 4.43%. The VIX {

the Chicago Board Options Exchange's (CBOE) Volatility Index

, known as the "fear gauge"] spiked, but remained below 20, signaling increased market anxiety.

Previously, optimism among investors was fueled by speculation regarding U.S. president Trump’s policies promoting disinflationary growth. However, mixed economic signals are now causing concern, particularly a report showing a decline in consumer sentiment alongside rising long-term inflation expectations — the largest drop since 1995. Additionally, existing U.S. home sales fell for the first time since September 2024, further complicating the outlook.

While January's job growth appeared solid, with 143,000 jobs added and the unemployment rate stable, institutional investors began the year with a pro-risk stance, optimistic about the U.S. economy’s trajectory. Yet, the recent volatility in economic data has prompted a reevaluation of strategies.

Weekly Crypto Highlight — SEC May Drop Lawsuit Against Coinbase

Coinbase announced that the U. S. Securities and Exchange Commission (SEC) has agreed to drop its lawsuit accusing Coinbase of operating an illegal exchange, pending Commissioners’ approval. Following this news, Coinbase shares initially surged in premarket trading, but fell by 4% to $246.30 as of midday in New York. Bitcoin also declined by about 1%, trading at around $97,000.

This decision signals a shift from the aggressive regulatory stance of former SEC Chair Gary Gensler, who faced criticism from the crypto industry for enforcing regulations through lawsuits. Last week, the SEC likewise requested a pause on a similar case against Binance, highlighting ongoing developments regarding a regulatory framework for digital assets.

The SEC's complaint will be unfairly dismissed, meaning it cannot be refiled. Coinbase CEO Brian Armstrong stated that this dismissal will entail no fines or changes in the company’s operations.

Coinbase has actively engaged in Washington, D.C., donating millions to support pro-crypto candidates and recently adding Chris LaCivita, a former Trump campaign manager, to its advisory council. Armstrong has also communicated with Trump directly.

The SEC initially sued Coinbase in June 2023 amidst a broader crackdown on the digital asset industry following the 

. Gensler had claimed that many tokens fell under SEC jurisdiction. 

The dismissal alleviates a significant burden on Coinbase, allowing it to list more tokens and refocus on product development, rather than legal defenses. This outcome removes a key litigation risk, enhancing Coinbase's capacity to innovate. The company recently reported strong fourth-quarter earnings, and now aims to collaborate with Congress and regulators in order to establish clearer rules for the crypto landscape.

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Weekly Institutional Insights: Mixed Economic Data Rattles Market; SEC May Dismiss Lawsuit

Learn everything you need to know about Bybit's recent security incident and the next steps in this article.

Security breaches have shaped the cryptocurrency industry for over a decade, forcing exchanges to evolve, users to become more cautious, and regulators to tighten their oversight. From the infamous 

 collapse to the Binance security breach and 

, history has shown that while no platform is immune to threats, those that respond swiftly and transparently can emerge stronger than ever.

 where over $1.5 billion worth of ETH and stETH were compromised, and while any breach is a serious concern, our rapid response and transparency set us apart from past incidents. Unlike FTX, where billions disappeared in mere hours due to mismanagement, Bybit immediately secured assets, froze affected wallets, and maintained full platform operations. Funds remain backed 1:1, and users can continue to trade, withdraw, and deposit without disruption.

Looking at past events, we can understand how crypto security has evolved, what lessons were learned, and what the industry must do next to ensure a safer future.

A Look Back: The Most Notorious Crypto Hacks That Changed the Industry

One of the earliest and most devastating exchange hacks, 

 — valued at $450 million at the time, but worth over $36 billion today. The platform’s weak security, lack of cold storage, and failure to detect suspicious transactions led to its downfall.

The lesson was clear: Exchanges must prioritize secure wallet management, rigorous internal controls, and transparency. The Mt. Gox collapse led to better industry-wide custodial practices, ensuring that no single exchange could operate without proper security measures in place.

 due to a smart contract vulnerability. In a surprising turn of events, the hacker returned the funds, proving that on-chain tracking and community response could play a key role in recovering stolen assets.

The attack showed that DeFi projects need more rigorous security audits and multi-signature controls to prevent exploits at the smart contract level.

Unlike traditional exchange hacks, FTX’s downfall wasn’t due to external attackers but rather internal mismanagement and misuse of customer funds. In just two hours, billions of dollars were withdrawn, leaving users helpless as the platform collapsed.

This event reshaped the industry by accelerating Proof of Reserves (PoR) adoption, a transparency measure that allows users to verify an exchange’s solvency. FTX’s failure highlighted the need for stricter regulations, better internal accountability, and clear asset-backing policies.

In October 2022, Binance suffered a $570 million hack after attackers exploited a vulnerability in BSC Token Hub, a cross-chain bridge used to transfer assets between blockchains. The exploit allowed hackers to move 2 million BNB tokens off the network. 

Binance’s swift response helped limit the damage, with the exchange pausing the BNB Chain for several hours. This attack highlighted the risks associated with cross-chain bridges, reinforcing the need for stricter smart contract audits, real-time threat detection, and stronger validator coordination to prevent similar exploits in the future. 

Each of these incidents led to major security advancements and industry-wide improvements. Now, Bybit faces its own challenge — and just like Binance and other top exchanges, we are committed to coming back stronger than ever.

How Exchanges Have Improved Security Over Time

The best exchanges don’t just survive hacks—they emerge stronger by adopting new security protocols, improving transparency, and prioritizing user protection.

One of the most significant changes has been the shift to cold storage dominance, where most exchanges now keep 90% or more of user funds in offline wallets to minimize exposure to potential attacks. Security audits have also become an industry norm, with regular penetration testing, bug bounty programs, and white-hat hacker collaborations helping to identify and fix vulnerabilities before they can be exploited.

User protection funds, like Binance’s SAFU, have set a new standard for ensuring users don’t bear the cost of security breaches. AI-powered fraud detection and real-time transaction tracking have also become essential tools for identifying suspicious activity before it escalates.

Beyond individual exchange improvements, the broader industry has adapted through regulatory changes. Proof of Reserves (

) has become a key transparency measure, allowing users to verify an exchange’s solvency. Licensing requirements and exchange accountability frameworks have also become more stringent, making it harder for bad actors to operate unchecked.

How Bybit’s Response to the Crypto Hack Sets a New Standard

The way an exchange responds to a security incident defines its long-term reputation and user trust. Over the years, some platforms have struggled to manage hacks transparently, while others have turned crises into opportunities to strengthen security. Bybit’s response to this incident demonstrates our commitment to transparency, operational resilience, and user protection.

The speed of response is one of the most critical factors in mitigating damage during an attack. Bybit acted immediately, isolating affected wallets and preventing further losses. Unlike past incidents where breaches went undetected for hours or even days, Bybit’s security teams responded in real time. The ability to contain the situation quickly is a testament to our proactive monitoring systems, robust security protocols, and dedicated cybersecurity team.

Full Transparency and Real-Time Communication

Many users lose confidence in exchanges when there is a lack of clear communication during a crisis. From the start, Bybit has maintained full transparency, providing regular updates to reassure users that their assets remain secure and backed 1:1.

Rather than delaying information or releasing vague statements, Bybit has been upfront about the incident, outlining the exact steps taken to contain the breach and reinforce security. This level of openness is crucial in maintaining user trust and setting a new industry standard for responsible crisis management.

One of the biggest concerns during an exchange hack is whether users will face withdrawal restrictions or see trading halted. Bybit ensured that trading, deposits, and withdrawals remained fully operational throughout the incident.

This highlights the exchange’s financial strength and liquidity, ensuring that user funds were not affected. No restrictions were placed on withdrawals, and all assets remained backed 1:1. 

Bybit isn’t just focused on resolving the immediate issue; we are using this incident as a catalyst to further enhance security across the platform. While we already implement industry-leading security measures, we are now working with top blockchain security firms to audit our systems and implement even more advanced security solutions.

Bybit remains financially strong, with all user funds fully backed and secure. Our commitment to industry-leading security practices, user transparency, and rapid response times ensures that we will emerge from this incident stronger than ever.

As the crypto industry continues to evolve, Bybit is setting a new standard for how exchanges should handle security challenges — with transparency, operational resilience, and an unwavering commitment to user protection.

While exchanges continue to improve security, users must also take proactive steps to safeguard their assets. Here’s how you can strengthen your crypto security:

 or SMS-based 2FA to add an extra layer of protection. This prevents unauthorized access even if your password is compromised.

Use withdrawal whitelisting to ensure only pre-approved wallet addresses can receive funds. This minimizes risks from phishing scams or unauthorized transactions.

If you’re holding large amounts of crypto, consider hardware wallets like Ledger or Trezor. Unlike exchange hot wallets, cold storage keeps assets offline and safe from cyberattacks.

Hackers often exploit major security incidents by impersonating exchange support teams. Always:

Enable transaction alerts to receive real-time notifications for any account activity. Report any suspicious actions immediately to Bybit support.

By following these best practices, you can further protect your assets even during uncertain times.

The Bybit incident reinforces the need for continuous security improvements across the industry. Moving forward, we can expect:

Stricter Security Standards for Exchanges

Regulators may push for mandatory insurance funds to protect users in the event of security breaches. Additionally, exchanges will be expected to adopt stronger internal controls and more frequent security audits.

To combat sophisticated attacks, exchanges will likely invest in AI-driven risk monitoring that detects anomalies before a hack can escalate.

Greater Transparency and Proof of Reserves

 to ensure their funds are secure. Bybit remains committed to maintaining full backing of user assets and transparent operational updates.

More exchanges may introduce hybrid custody models, where users can trade while maintaining partial self-custody of their assets.

Crypto’s Strength Lies in Solidarity: Bybit’s Gratitude to Partners and Users

One of the most powerful takeaways from this incident has been the overwhelming support from our partners, industry leaders, and users. As soon as the news broke, top security firms, blockchain analytics teams, and exchange partners reached out, offering their expertise and assistance to track the stolen assets and enhance security.

We are incredibly grateful for the outpouring of support from our community. Crypto has always been an industry built on resilience and collaboration, and this event has reinforced that when one exchange is attacked, the industry stands together to protect users and strengthen security.

Bybit would like to extend a heartfelt thank you to our partners, users, and the broader crypto ecosystem for standing with us during this time. Your trust, patience, and unwavering support fuel our commitment to come back stronger, set new security benchmarks, and continue providing a safe and innovative trading experience.

Bybit’s Commitment to a Stronger Future

Despite this setback, Bybit remains one of the strongest and most well-respected exchanges globally. Our response to this incident proves that:

Bybit’s journey doesn’t end here. We will continue to improve, evolve, and set new security standards for the industry.

The crypto space must learn from every challenge, and with greater security, transparency, and resilience, we can build a safer, more trustworthy future for all users.

The road ahead is clear — Bybit is here to stay, and we are stronger than ever.

For real-time updates, you may refer to our official channels such as the 

Beginner

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Hacks That Strengthened Crypto: Responses That Build a Safer Future For All

As of mid-February 2025, the cryptocurrency market is experiencing movements driven by economic pressures and regulatory movements. 

As of mid-February 2025, the cryptocurrency market is experiencing movements driven by economic pressures and regulatory movements. Recent inflation data has rattled financial markets, leading to a sharp reassessment of expectations for Federal Reserve policy. A higher-than-expected Consumer Price Index (CPI) report has caused Bitcoin to dip below $94.2K before rebounding to approximately $98.1K. This fluctuation illustrates how macroeconomic factors are increasingly influencing digital assets, mirroring trends seen since early 2022 when the Fed began raising interest rates.

Santiment data reveals that discussions around the terms “CPI” and “inflation” surged to 1.75% of all crypto conversations, the highest level since 2022. This heightened sensitivity indicates that when markets are stagnant or declining, economic news is met with increased concern and fear, often leading to sell-offs. Despite the increased uncertainty, Bitcoin has demonstrated resilience, staying above the $98K mark. Nevertheless, continued inflation could lead to further volatility in risk assets such equities and crypto.

The LIBRA scandal has further complicated the crypto landscape. Argentine President Javier Milei's endorsement of the cryptocurrency led to a dramatic rise — and an even more significant fall in value, as it plummeted by 80% within days. Allegations of fraud surrounding Milei have intensified scrutiny of speculative assets, particularly meme coins, leading to a crisis of confidence among investors.

The fallout from this scandal reflects a broader trend of growing impatience with high-risk assets. Retail sentiment has turned bearish, as evidenced by increased mentions of selling across social media platforms. This shift highlights the need for thorough research before investing in speculative projects. The LIBRA incident serves as a stark reminder of the risks associated with relying solely on endorsements for investment decisions, prompting many traders to seek more stable and established cryptocurrencies.

Emerging Opportunities and Investor Behavior

Litecoin is gaining traction, driven by the possibility of a spot ETF approval that could pave the way for broader access to altcoins, further maturing the crypto market. As discussions around the term “Litecoin ETF” spike, market analysts are optimistic about the likelihood of approval, which could enhance investor interest in Litecoin and similar assets.

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Bybit x Santiment: LIBRA Scandal Gives Rise to Meme Coin Crisis; Litecoin ETF Anticipations Build Up

KAITO is the core currency of Kaito AI’s InfoFi ecosystem, enabling transactions, governance, staking, and community engagement.

The S&P 500 fell 0.43% amid Walmart’s weak outlook, with investors eyeing PMI and home sales data next. Gold rose 0.23% to $2,939 on safe-haven demand but retreated from a $2,954 high. Traders await S&P Global Flash PMIs. Coindesk Indices, an index measuring broader cryptocurrency market performance was up by 0.02%, with Bitcoin and Ether rising by 2.46% and 0.69%, respectively in the past 24 hours. Trade these markets and more with up to 500x leverage on Bybit MT5 using this 

Today’s top performer is BERA, which surged nearly 15.8% after The Graph integrated Berachain Mainnet on day one, enabling seamless onchain data access.

Berachain (BERA), founded in 2021, is a Layer 1 blockchain with Proof-of-Liquidity consensus, ensuring security and liquidity while maintaining full Ethereum compatibility. The Graph has 

 support for the newly launched Berachain mainnet from day one. Developers can now query Berachain data using Subgraph Studio, making it easier to organize and access onchain data. This integration enables the creation of fast and efficient frontends for Berachain-powered dapps.

Check Out the Latest Prices, Charts, and Data of 

 is the core currency of Kaito AI’s InfoFi ecosystem, enabling transactions, governance, staking, and community engagement. The total supply is allocated as follows: 56.67% to community and ecosystem initiatives (including ecosystem growth, creator incentives, and liquidity rewards), 25% to core contributors, 10% to the foundation, and 8.3% to early backers. Distribution is merit-based, using AI-driven assessments of engagement, governance participation, and long-term alignment with Kaito’s vision. Staking provides rewards and voting rights, ensuring active participation. A claim process for KAITO will be announced soon.

Yesterday, BTC Spot ETFs recorded a net outflow of $252.8M, including $33.5M from GBTC and $219.3M from non-GBTC funds.

. With $43 million in funding, this presents a valuable opportunity. To maximize your points, complete the "Generate at least one transaction on Sahara Testnet" task by sending a small amount of SAHARA via Metamask. This earns 20 points, a significant amount compared to other tasks. Ensure you take full advantage of this opportunity.

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KAITO Powers the InfoFi Ecosystem with Governance Staking and Community Rewards

Bitcoin

Blockchain

BitVM (Bitcoin virtual machine) is a computational engine designed to enable smart contract–like functionality for Bitcoin. 

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In early October 2023, the acclaimed blockchain developer Robin Linus released the white paper for BitVM, a computational engine for 

 chain. Linus is a prominent figure in the industry, having created ZeroSync, a 

 protocol for Bitcoin. His latest innovation, BitVM, has the potential to impact the industry on a much more profound level than the ZeroSync platform.

By enabling smart contract functionality for the Bitcoin network, BitVM has the potential to leverage the massive army of Bitcoin holders and traders. Currently, smart contracts and 

 (ETH) and other smart chains. Yet, the world’s largest chain — Bitcoin — eschews the ongoing DApp revolution. BitVM is the latest and probably most promising technology that’s about to change the status quo.

Despite being the first and largest blockchain, Bitcoin isn’t natively equipped to run smart contracts, the technology that underpins DApps. As such, it largely remains a platform for cryptocurrency asset transfers and storage.

 details the technological implementation of this promising idea.

You can think of BitVM as an add-on computational layer for the Bitcoin chain that developers can use to power smart contract–like functionality. Notice how we use the term “smart contract–like” instead of simply “smart contract” when discussing BitVM. This is because there’s an important distinction between the complex smart contracts that run on Ethereum and BitVM's smart contract capabilities.

While Ethereum smart contracts are capable of supporting multi-party transactions, BitVM is designed to enable mostly two-party transactional exchanges. We’ll delve deeper into the distinction between the two in a later section.

Most of the processing in BitVM happens off-chain, reducing the load on the Bitcoin chain and enabling more efficient operations. The off-chain processed transactions are bundled into batches and posted to the underlying Bitcoin blockchain, utilizing a validity confirmation model similar to the one used in 

An essential feature of BitVM’s smart functionality is its 

. Turing-complete systems are capable of executing computational tasks of any degree of complexity. BitVM’s Turing completeness ensures that this computational engine can be used to program sufficiently complex smart contract–based applications.

BitVM's functionality is made possible through Bitcoin's 

. BitVM uses a model combining fraud proofs with a challenge-response protocol to process and validate transactions between two parties: a prover and a verifier. The prover initiates a computational task and sends it over the channel established between themselves and the verifier, who then confirms the validity of the computation. Once verified, the transaction is added to the overall batch collated for posting to the underlying Bitcoin blockchain.

If the verifier rejects the computational task sent by the prover, Bitcoin’s on-chain validity checking mechanism can then be used to examine the transaction and settle the dispute. The additional on-chain validation in such disputes protects the prover from spurious, wrongful rejections by the verifier, and the system is designed to punish verifiers who unjustly reject legitimate computations performed by provers.

At the same time, the on-chain dispute validation is also designed to penalize provers who send fraudulent or incorrect computations. If the verifier’s dispute claim is found to be justified, it’s the dishonest prover who is penalized by the system.

While additional on-chain validation in cases of disputes consumes the resources of the Bitcoin blockchain, the two-way interactions in which no disputes arise are settled within the BitVM environment, with no consumption of Bitcoin’s resources. The key idea is that the vast majority of two-way interactions between provers and verifiers aren’t going to result in disputes. As such, the overall impact of BitVM transactions on Bitcoin’s chain will be minimal.

BitVM’s model, therefore, assumes that most transactions posted to the blockchain are valid — thanks to the mutual agreements between provers and verifiers — unless a fraud claim is raised. Such an assumption is similar to the one used in classic blockchain optimistic rollups. While the exact technical nuances of optimistic rollups and the model used by BitVM differ, the verification model used by the computational engine can generally be described as one representation of optimistic validation technology.

After bundling transactions into a batch, BitVM then posts them to the Bitcoin blockchain. Both the optimistic validation model and batch-style processing used by BitVM significantly reduce the computational load on Bitcoin. As such, BitVM not only enables smart contract functionality on Bitcoin but does so in a highly efficient, low-consumption manner.

BitVM opens up enormous potential to leverage the world’s largest blockchain beyond simple Bitcoin transactions. The technology behind BitVM and its Turing-complete nature enables a large number of DApp solutions, mostly those that involve two-party interactions.

Some of the most promising use cases of BitVM on Bitcoin’s blockchain include the following.

Automated or High-Volume Payment Solutions

While Bitcoin by itself can be used for ordinary 

 (P2P) payments between two parties, the lack of smart contract functionality on its blockchain currently prevents the use of sophisticated payment solutions based on high-volume transactions or automated arrangements. 

There are many businesses, particularly within the fintech and supply chain industries, that would love to see such capabilities within Bitcoin. For instance, BitVM could enable automatic fulfillment of payment obligations upon delivery of goods or services. Frequent micropayments between two parties have also become a possibility, thanks to BitVM’s efficient transaction processing.

The core functionality of betting DApps involves transactions between the betting service operator and each individual bettor. BitVM could potentially enable two-way contracts, in which bettors place their bets with the operator and get paid or charged based on the outcome of the sports games and other events they punt on.

BitVM’s smart contract–like functionality can also be used to power certain 

 (DeFi) apps. A potential use case for the computational engine would be apps in which a chain of transactions between just two parties is enough to settle a contract. One example of such an app is a 

 model. Under this model, two parties — a seller and a buyer — would enter into a contract to swap cryptocurrencies. 

However, the lack of multi-party functionality within BitVM might make some of the more complex DeFi apps — for instance, automated market maker (

)–based DEXs — challenging to implement natively. AMM DEXs heavily utilize 

, repositories from which many users deposit funds and get paid a share of the trading fees generated from the pools. As such, these exchanges require fairly complex multi-party implementations.

Environmentally-Friendly Payment Solutions

Being a massive consumer of energy, the Bitcoin blockchain isn't among the first choices of companies focusing on low environmental impact. BitVM’s efficient, low-footprint processing model enables transactions that use very little energy. The engine, therefore, can be used for green payment solutions. For instance, in the agricultural sector, the term "green payments" refers to payments (made to producers) that create a positive environmental impact. BitVM could be used to develop solutions that facilitate these agricultural payments.

BitVM has many conceptual similarities to the 

 (EVM), the computational engine that powers the Ethereum blockchain. EVM is a critical component of Ethereum and enables smart contracts and DApps on the blockchain. 

Similar to BitVM, EVM is a Turing-complete system, a property that allows developers to create apps with sophisticated functionality. However, BitVM and EVM also have several distinctions. The key differences between these two computational engines are as follows:

BitVM’s core concept of Turing-complete Bitcoin contracts is nothing short of revolutionary. However, despite the engine’s merits and promise, it has certain limitations. One major limitation of BitVM is its inability to handle multi-party transactions, which restricts the use of more complex computations and solutions. As modern DApps grow more complex, multi-party functionality becomes vital.

Another limitation of BitVM arises from the heavy off-chain processing load (which, curiously enough, is one of its key merits). While off-chain processing is excellent for reducing the load on the Bitcoin network, it gives rise to two potential issues, the first of which is the resulting load placed on off-chain resources. Large-scale transactions and apps might place heavy demand on off-chain computing resources, which could significantly diminish BitVM’s environmental and efficiency advantages.

The second issue deals with transaction security. Bitcoin’s built-in cryptographic security mechanism has an excellent track record of protecting the network from hacker attacks and fraud. Moving a large proportion of transaction processing off-chain inevitably introduces more weak points to the overall data security framework.

Some of BitVM’s limitations might be addressed by combining the engine with a Bitcoin 

 protocol, which runs over the Bitcoin blockchain, is capable of supporting more complex, multi-party smart contracts.

Turing-complete Bitcoin contracts offered by BitVM are a revolutionary concept with the potential to fundamentally change the landscape of the cryptocurrency industry. Various DApp niches, from DeFi and payments to betting and supply chain solutions, might profoundly benefit from utilizing the computational engine.

BitVM is also a major undertaking aimed at drawing in the multimillion army of BTC holders to participate more actively in the crypto industry beyond mere asset transfers and storage. At the moment, 

 have non-zero balances. This represents a vast potential for developers utilizing BitVM.

The highly promising computational engine is now in the early stages of its conceptual development. Its white paper was just released in early October 2023, and there’s going to be a period of time during which the developer community “warms up” to the concept of Turing-complete Bitcoin contracts. Over the following few months, we’ll all likely hear more about BitVM. Stay tuned!

What Is BitVM and How Is It Different From EVM?

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