Weekly Rollup - February 25, 2025

• Bybit hack of US$1.4 billion marks the largest in crypto history.
• The U.S. SEC has acknowledged multiple XRP ETF filings.
• The SEC dropped its cases against Coinbase and Opensea.
• Franklin Templeton launched EZPZ ETF, offering BTC and ETH exposure.
• Two key pieces of crypto will be debated in Congress in the coming weeks.

Macro Market Updates:

Traditional finance markets were relatively flat, then declined at the end of the week on the U.S. Federal Reserve’s continued inflation concerns and news that Chinese researchers discovered a new bat coronavirus, HKU5-CoV-2. The S&P500 is down over 2.% from last week’s high, while the Nasdaq is down almost 4%. The Dow Jones Industrial Average is down 2.7%. In other parts of the world, rate cuts continued, with the Reserve Bank of Australia lowering its cash rate by 25 basis points to 4.10%.

The U.S. Federal Open Market Committee (FOMC) remains steadfast in pausing rate cuts for now. The FOMC’s January statement cited the potential inflationary impact of President Trump's trade and immigration policies and geopolitical developments that may disrupt supply chains as key reasons for its policy stance. This week, U.S. preliminary GDP data will be released on Thursday, and China’s latest manufacturing purchasing managers index (PMI) update will be released on Friday.

Crypto Market Sectors:

Data availability grew the most across all market sectors this week, with modular blockchain network Celestia (TIA) growing by 7.8%. The remainder of the market contracted, presumably due to ongoing U.S. inflation concerns, continued geopolitical uncertainty, and the US$1.4 billion hack of Bybit (more on that below). Gaming, oracles and memecoins were the biggest losers this week. Average performance across all sectors this week was -9%.

Bitcoin continued to consolidate this week. Opening the week at US$96,119, price gained slightly before retracing on news of the Bybit hack. Bitcoin is currently trading at US$91,750, a decrease of 4.6% on the week. This week’s losses are presumably due to ongoing inflation concerns in the U.S. and the impacts of the Bybit hack.

Strategy (formerly MicroStrategy) has announced plans to raise more capital to buy bitcoin. The software company has set a $2 billion target for selling zero-coupon convertible bonds. The unsecured bonds mature in March 2030. Also this week, Strategy’s co-founder Michael Saylor said if the U.S. Government bought 20% of the bitcoin supply, it could pay off the country’s national debt.

The week’s events saw US$571 million withdrawn from bitcoin asset investment products, while short-bitcoin saw inflows of US$2.8 million.

It was another lacklustre week for Ethereum. Price broke convincingly above US$2,760 for the first time in weeks but later declined again on news of the US$1.4 billion Bybit hack (the largest in crypto history). Analysts originally expected spot buying pressure from Bybit in acquiring ETH to replace the stolen assets would buoy prices. However, a lack of liquidity across over-the-counter (OTC) desks and exchanges is making Bybit’s buying activity a challenge. Order book depth across the top ten exchanges stands at US$52 million, while Bybit needs to buy US$700 million worth of ETH.

The Bybit hack has been traced to North Korean Lazarus Group, which has attacked other exchanges and platforms in the past. Bybit’s ETH cold wallet was drained in the hack, with around 70% of customers’ ether holdings stolen. A transaction where funds were transferred from Bybit’s multi-sig wallet to a warm wallet caused the hack. Malicious code was entered on the transaction, which changed the smart contract logic to facilitate the theft of funds. The attack triggered a bank run on the exchange, where US$6.1 billion of outflows occurred in three days. Bybit CEO Ben Zhou explained that “all hands are on deck” to process withdrawals, noting the company’s reserves will cover most withdrawals while a bridge loan has been accessed to process ETH withdrawals.

The week’s events have sparked debate over the possibility of rolling back the Ethereum network to 21 February before the hack occurred. In short, rolling back the network would invalidate the transactions and return the funds. However, this solution goes against what many believe to be a key point of difference in crypto — public ledgers should be immutable.

An important note: At Caleb & Brown, client funds are never used for exchange liquidity or operational needs. Our trading execution is funded entirely by our own operational capital, ensuring client balances remain untouched and secure. Bybit’s efforts to repurchase $700M in ETH amid market illiquidity highlight the risks of exchanges that rely on customer funds for liquidity. At Caleb & Brown, client balances are always held 1:1, secured in direct on-chain custody, and never traded, lent, or used as collateral. This structure ensures each client’s assets remain secure regardless of broader market conditions.

Ethereum asset investment products saw modest inflows of US$3.7 million this week.

Single chain gains

• Sonic (previously FTM) gained 65.4%, taking its market cap to almost US$2.9 billion. The gains are presumably due to an uptick in investor interest and bullish momentum following Fantom’s rebrand and token upgrade to Sonic in January. Total value locked (TVL) on the Ethereum virtual machine (EVM) layer-1 network has grown by 300% in the last two months, signalling the popularity of the platform.

DeFi winners

• Sky (previously Maker (MKR)) grew by 54%, taking its market cap to US$1.3 billion. This week’s gains are likely due to the network’s stablecoin, USDS, reaching over US$9 billion in supply. The Sky Ecosystem provides users with yield-generating stablecoin, USDS, with some liquidity pools offering around 10% annual percentage yield (APY) in the last week.

The art of crypto

• Tensor (TNSR) grew by 22.2%, which takes its market cap to US$127.6 million. The Solana NFT trading marketplace gained over 25% throughout the end of the week, presumably due to the SEC’s decision to dismiss its case against NFT marketplace, OpenSea (more on that below).

This week’s biggest losers

• Raydium (RAY) lost 35.9%, taking its market cap to just under US$942 million. The automated market maker (AMM) plunged 22.9% on the news that PumpFun is testing an in-house AMM to replace Raydium.
• Nano (XNO) declined by 24%. This takes its market cap to US$156.2 million. The peer-to-peer currency network held an “Ask Me Anything” (AMA) session on 19 February to discuss the project’s technology and vision. Price declined by over 16% alone on the day of the AMA session, suggesting that the information covered didn’t satisfy investors.

Digital asset investment products saw another week of outflows, with US$508 million leaving funds. This week’s outflows are due to continued uncertainty over President Trump’s tariffs policy and the U.S. Federal Reserve's ongoing inflation concerns due to these policies. Trading volume also declined last week to US$13 billion, a significant decline from US$22 billion two weeks ago.

While bitcoin asset investment products saw outflows, altcoins saw more inflows. XRP led the way with inflows of US$38.3 million. Solana and Sui saw inflows of US$8.9 million and US$1.5 million, respectively.

Crypto ETF developments

• XRP gained 7.5% on Wednesday after the U.S. Securities and Exchange Commission (SEC) acknowledged multiple XRP ETF filings, while Brazil approved the first spot XRP ETF in the world. The filings will now enter a 21-day public consultation period. After this, the SEC will have 240 days to approve the new ETFs.
• Franklin Templeton launched a new ETF product, EZPZ. The fund, listed on the Cboe BZX, offers investors weighted exposure to bitcoin and Ethereum. Weight is determined by the market capitalisation of the two cryptocurrencies. Currently, the fund has 82% exposure to bitcoin and 18% exposure to Ethereum.

• Two key pieces of crypto legislation are about to be debated in both houses of Congress. The Senate Committee on Banking, Housing, and Urban Affairs will consider “bipartisan legislative frameworks for digital assets”. And in the House, the Financial Services Committee will hear testimony on stablecoins and CBDCs on 5 March. While there is a Republican majority in the Senate, the party will need seven votes from the Democrats to reach the 60 votes required to pass the legislation.
• The U.S. SEC continued on its crypto-friendly path this week by ending some of its investigations and cases against crypto companies and reversing one of the agency’s own appeals. The case against Coinbase was dropped on Friday, with the SEC set to formally approve the dismissal this week. Similarly, the SEC announced that it intends to drop charges against NFT marketplace OpenSea, after a case was brought against the company in August 2024. Finally, a four-page motion filed in the Court of Appeals for the Fifth Circuit reversed an earlier SEC appeal to expand securities laws to cover DeFi users and projects.
• A new organisation has been launched by the U.S. SEC to combat crypto crimes. The Cyber and Emerging Technologies Unit will be part of the SEC and collaborate with the new crypto task force to protect investors, fight hackers trying to gain access to sensitive information, target criminals using social media to target victims and facilitate capital formation and market efficiency.