ETH drops 4% after Bybit's hack is confirmed
Halogen Capital
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Does Halogen have assets on Bybit, and should you buy the dip?
Price Update
Global Markets - Key Events
Market momentum is fading. The S&P 500 and European stocks hit record highs earlier this week but have since retreated as Trump’s latest tariff threats on pharmaceuticals, semiconductor chips, and wood reignite trade war concerns.?
Seasonal factors are also at play—U.S. retail traders are slowing activity ahead of tax payments, and retirement fund inflows typically dip in March.?
Adding to concerns, U.S. business activity has slumped to a 17-month low as reported by S&P Global on Friday,, reflecting growing unease over tariffs and government spending cuts. Investor sentiment is clearly shifting, with uncertainty on the rise.
Adding to the uncertainty, minutes from the Federal Reserve’s latest policy meeting show that officials want to see more progress on inflation before cutting interest rates further. They also expressed concern that Trump’s tariffs could complicate that effort. In response, Treasury yields edged lower, with the 10-year yield dipping slightly to 4.535% and the 2-year yield falling 3 basis points to 4.274%.
Malaysia Markets - Key Events
The relief rally benefited the Ringgit and subsequently the bond market, while the equity market struggled amid 4Q24 earnings release season.?
The Ringgit rallied to 4.416 gaining 0.36% against the US Dollar. This was driven by general Dollar weakness amid easing trade tensions (potential trade between US and China).?
Government bonds staged a rally after being battered for a couple of weeks:
With corporate bonds benefitting as well:
Only equities did not benefit as much. The KLCI ended flat at 1,591.03 points, falling 0.04% in Week 8 of 2025. Lopsided earnings release across the index masked some bargain hunting from local and foreign players alike.
In economic releases, Malaysia exports grew +0.3% year-on-year in Jan ’25 , lower than market consensus of +5.0% year-on-year. This was attributed to Chinese New Year falling in January instead of the usual February. Recalling that Dec ’24 saw high export growth of +16.9% year-on-year, this seems to suggest that orders were fulfilled in December in anticipation of operation disruptions during the festive season in January.
Crypto Markets - Key Events
This week in crypto was a tale of highs and lows.?
Regulatory relief fueled early optimism, as Coinbase announced that the SEC will drop its enforcement case, pending commissioner approval. The news sent COIN up 5% and lifted crypto trading stocks like Robinhood (HOOD), while Bitcoin surged toward the $100K mark for the first time.
However, the rally was short-lived. Bybit, one of the world’s largest crypto exchanges, suffered a $1.5 billion hack—the largest in crypto history— triggering a sharp sell-off. Within minutes, BTC and ETH dropped 2%, wiping out recent gains.?
Bitcoin is now back near $95K, down 4% on the week, while ETH sits at $2,700 as per CoinGecko’s data.?
Meanwhile, Franklin Templeton is pushing for a Solana ETF with staking, signaling growing institutional interest despite market volatility.
What We Are Monitoring For The Week Ahead
Looking Ahead: Our Insights
Global markets brace for a defining week as geopolitical shifts, monetary cues, and cryptocurrency volatility converge to shape the outlook. Advances in US-Russia-Ukraine peace negotiations could bring stability to energy markets, potentially tempering Brent crude prices, and bolster European indices such as Poland’s WIG20, underpinned by robust agriculture and defense sectors. Yet, President Trump’s various tariff initiatives, introduce uncertainty, threatening supply chain stability and inflationary pressures. This comes just as rate cut expectations dwindle, with futures now pricing in only one FFR adjustment in 2025.?
The upcoming PCE report will be a key focus after hotter-than-expected CPI (3.0% YoY) and PPI readings. If core PCE prints at the expected median estimate of 0.27% MoM (2.6% YoY), it could temper rate cut fears and support risk assets. Meanwhile, US corporate earnings have remained resilient, with two-thirds of firms beating estimates. However, softening services PMI and rising auto loan and credit card delinquencies suggest underlying economic fragility.
Weak US consumer sentiment (64.7 vs. 67.8 expected), a sluggish S&P Global Composite PMI (50.4, a 17-month low), and fears of a new bat virus outbreak fueled a stock market pullback on Friday as selling pressure mounted. The US stock market continues to lag behind global peers, with Poland and Korea outperforming the S&P 500 by over 10% YTD. This divergence reflects a softening USD and a global manufacturing rebound, supported by peace efforts and regional rebuilding. Meanwhile, Japan’s strong economic rebound—evident in robust inflation and GDP prints has reinforced JPY resilience, particularly against the dovish FOMC stance. With USDJPY breaking below 150, further downside is likely, driven by corrections in relative real rates.?
On local front, the February MSCI rebalancing could drive near-term MYR weakness due to equity outflows, with Inari and Genting Malaysia's removal from the MSCI AC Asia Pacific Index potentially triggering ~ $225 million in outflows.
The crypto sector faces fresh challenges following Bybit’s $1.5 billion hack, with North Korea’s Lazarus Group confirmed by on-chain sleuth ZachXBT to be responsible. Despite Bybit’s assurance of stability—backed by loans from several exchanges like Binance and MEXC, the incident has triggered 350,000 withdrawal requests, raising concerns about liquidity risks. Unlike the collapse of FTX, where the industry largely stood by, this time, crypto players rallied to support Bybit, recognizing that standing together is better than standing alone. The quick mobilization of liquidity from exchanges highlights a shift in industry behavior—perhaps a lesson learned from past crises.
At Halogen, we do not hold assets on Bybit, and the majority of our assets are secured with regulated crypto custodians. This event should serve as a wake-up call for those relying on self-custody, emphasizing the importance of understanding what they are signing, or better yet, entrusting professionals like us. Despite initial concerns, Bybit appears solvent, given their confidence in allowing withdrawals. However, losing $1.5 billion in ETH could actually be short-term bullish, as Bybit may be forced to buy back ETH to meet obligations. On-chain data suggests they have already repurchased $200 million worth as of Sunday. On the other hand, the ability of the Lazarus group to cash out is limited due to enhanced blockchain surveillance and sanctions enforcement.
ETH stands at a juncture, opportunities to buy on dips emerge if confidence holds, or short positions beckon if pressure intensifies. Key signals to watch include funding rate spikes, which signal extreme long/short positioning, exchange inflows, which may indicate potential sell pressure, and open interest flows, which reflect shifts in leveraged positions. The coming weeks will be crucial in determining whether ETH’s recovery sustains or if further downside risks emerge.
The global cryptocurrency market lost $200 billion briefly following Bybit security breach, as Bybit’s hack triggered panic selling and mass liquidations. Data from CoinGlass shows over $544 million in leveraged positions were liquidated within 24 hours, deepening the sell-off. Despite the large caps sell-off, Bitcoin’s dominance remains at 60%, while a few cryptocurrencies (Story, Sonic and Maker) defied the trend with massive gains, showcasing resilience amid market volatility. As for current narratives, XRP continues to benefit from ETF speculation, providing near-term support, while Solana faces headwinds as the FTX estate unlocks 11.2 million tokens on March 1, which may potentially weigh on prices.
Looking ahead, a sub-49 China PMI could weigh on Hong Kong’s tech rally, as stagnant credit growth—reflected in total FI loan data poses headwinds for China’s equity market. Meanwhile, the Federal Reserve’s signal of QT pause in the FOMC minutes could boost risk assets (crypto and bond), as US yields soften amid slowing economic growth.
That said, the last time reserves approached a critical liquidity inflection point was September 2019, when scarcity triggered a major repo spike, abruptly halting QT. However, based on the reserve demand elasticity level—a key gauge of repo market stress, as long as levels remain near zero, short-term liquidity risks appear minimal.
Historically, crypto has surged in anticipation of the end of QT, and its increasing link to the real economy now amplifies this correlation. Finally, Bybit’s proof-of-reserves update on Monday will serve as a crucial test for the cryptocurrency market. Failure to reassure investors could spark a derivatives-led sell-off, exacerbating existing market fragility.
As a strategic takeaway, emerging Europe and Asia stand out as cyclical beneficiaries of the current market environment. A strengthening manufacturing cycle and a softer dollar underpin non-US equity outperformance, a trend poised to persist as global recovery takes root.?
Thank you for reading and we’ll see you next week!
Team Halogen
Disclaimer: The information, analysis, and viewpoints presented here are intended solely for general informational purposes and should not be construed as personalised advice or recommendations for any specific individual or entity. For personalised investment decisions, individual investors are advised to consult their licensed financial professional advisor. The opinions expressed by the Manager are based on certain assumptions or prevailing market conditions, and they are subject to change without prior notice. This material is being distributed for informational purposes only and should not be regarded as investment advice or an endorsement of any particular security, strategy, or investment product. While the information provided herein may include data or opinions from sources believed to be reliable, its accuracy and completeness are not guaranteed. Reproduction of any part of this material in any form or reference to it in other publications is strictly prohibited without the express written permission from Halogen Capital Sdn Bhd. Halogen Capital Sdn Bhd and its employees assume no liability regarding the use of this material or its contents.