Crypto Giggle
Contents
You Can Find It In This Article
The “Critical Correction”, and the “Tactical Retreat”.
The week began for bitcoin at $95,500. On the evening of February 25, the price of bitcoin broke the previous limit of $91,000.
Overnight, the cryptocurrency Fear & Greed Index dropped from 49 points to 25. This is a sign of extreme fear.
By mid-week, the Today’s Viral level= DarkRed had reached a low of around $78,000.
The price of bitcoin increased on 2 March amid Donald Trump’s announcement that XRP and SOL would be included in the US National Cryptocurrency Reserve, even though the asset wasn’t mentioned.
The digital gold was trading for 90,600 at the time this article was written, with a market capitalisation of approximately $1.75 trillion. This is a decline of around 8.5% over the past week.
Bitfinex experts declared the fall below $91,000 as a “tipping-point” during a consolidation of three months.
Analysts say that the correlation between Bitcoin and traditional financial markets has increased. Macroeconomic instability is a major factor in the decline of investor activity.
Binance CEO Richard Teng referred to the cryptocurrency market correction as a “tactical withdrawal.” According to him, this drawdown will be short-lived and not last for long.
It is crucial to see this as an tactical retreat, and not a reverse. It has happened in the past and it was followed by a stronger rebound. This is the reason we must remain positive,” wrote he.
The fear and greed indicator dropped 10 points on 27 February amid an ongoing decline in the market, which corresponds to a zone of extreme anxiety. Last time these values were seen was June 2022.
Matrixport’s analysts believe that the current bitcoin pullback is likely to last until either March or April, before an attempt at a return to its previous highs will be made.
The strengthening of the USD was noted by experts amid threats from the US president to introduce tariffs against its foreign trading partners. This reduces the liquidity in the market and places pressure on high-risk assets.
According to them, macroeconomic factors have become more important for pricing the first cryptocurrency due to the popularity of BTC-ETF by investors who trade digital gold via TradFi.
A study conducted by 10x research shows that arbitrage is responsible for the bulk of ETF volume (56%) The difference in spot quotes and futures prices is what traders profit off of.
Experts said that in the current market, the funding rate and basis spreads were too low for holding existing positions or opening new ones.
Ilya Kalchev, Nexo Platform analyst, believes that Bitcoin quotes may fall to support levels at $72,000.
He said that now, “the market has regrouped”. A sharp decline in investor confidence has prompted some to question the rapid recovery of digital currency.
A temporary drop is likely as the market fills the gaps left by rapid growth. “Bitcoin is likely to find a strong support between $72,000 and 80,000,” Kalchev said.
This level could be the foundation for a sustained recovery and reduce the risk of a severe correction.
Analysts at IntoTheBlock believe that the increase in Bitcoin network activity could indicate a trend reversal.
The number of addresses active as of February 28th was 912300. This is the same level that existed in December 2024 when digital gold cost $105,000.
“Historically onchain frenzy has often been associated with the market’s peaks and valleys, which are associated with sellers who panicked and buyers with a sense of adventure,” said IntoTheBlock.
Although there is no guarantee of any change, experts called this a signal of “a critical turning point”.
Ethereum started the week around $2800. The coin hit a low of $2100 on 28 February but stabilised at $2250 by the weekend.
Ethereum was trading for $2270 at the time this article is written, with a $272.54bn market cap. About 18.3% of the market value was lost in the last seven days.
CryptoRank has noted that the Ethereum Foundation scandal and its effects on Solana, the main cryptocurrency competitors’ exchange rates have been impacted by the controversy surrounding the Ethereum Foundation.
All but ADA (+9.7%), and XRP (+2.2%), showed declines among the 10 top assets by capitalization;
The Price of BNB has dropped by 5.6 percent, and SOL’s price is also down 5.5 percent in seven days.
Ethereum Foundation Reforms
The Ethereum Foundation, on 28 February announced the formation of the Silviculture Society. This independent group will provide informal recommendations regarding key issues in ecosystem development.
The society’s main goal is to maintain the basic principles of the Project, including open-source, privacy, security, and anti censorship.
Silviculture Society is composed of experts from outside. The foundation will use their advice to make important decisions, while maintaining the Ethereum original values.
Matthew Green is a member of the Zerocash Society. He’s a lecturer at the Department of Computer Science of Johns Hopkins University, and he was one of those who wrote the Zerocash original white paper.
EF announced on 1 March the appointments of Nethermind co-founder Tomasz Stanczak and researcher Xiao Wei Wang as Co-Executive Directors. The two will take up their positions on March 17.
Tim Beyko, Ethereum core developer and the new appointment’s commentator said: “If we do our job right today, it will go down as the biggest turning point in Ethereum history.”
During the AMA, Vitalik Feist, Justin Drake, and Dankrad Fist answered your questions on scaling, revenue from L1 and security.
Buterin and other developers have discussed ways to improve the economics of the blockchain network. They suggested returning L2 revenue, as well as promoting “native rolls ups.”
The goal of Ethereum neutrality is not EF neutrality. Sometimes, the goals are in line, and sometimes, they differ. My biggest concerns are the wallet and L2 level as well as the staking providers and custody providers. EF recently began to act on the first two areas by pushing for interoperability standard adoption,” explained the network’s founder in response to a query about a possible “corporate takeover”.
Drake and Feist stressed the importance of scaling native “data accessibility” (DA), on L1, instead of alternative platforms like EigenLayer which are a “big risk.”
Developers activated Pectra’s hardfork on the Holesky Testnet at epoch 115,968. The network stopped finalising slot allocations as a result.
Paritosh Jaanti, of Ethereum Foundation said that the upgrade had “uncovered a configuration problem on three core clients.” According to the developer, the bug identified does not impact the core network and has nothing to do with Holesky features.
The problem was caused by the fact that Holesky’s (and Sepolia’s) deposit contracts were on an address different from our core network. Why? “I have no idea”, confirmed Ethereum Teamleader Tim Beyko.
The activation of Pectra’s hardfork in the Sepolia Test Network is scheduled to occur on 5 March.
Bybit hack: The aftermath
By the 24th of February, Bybit cryptocurrency exchange had recovered all Ethereum reserves (444,870 Ethereum) stolen during the attack on 21st February.
Lookonchain reports that the platform raised $446,870 ($1.23bn), through direct purchases, loans and whale deposits, since the hack. The exchange returned a 40,000 ETH to Bitget on 25 February;
Adam Back, co-founder of Blockstream and an avowed cypherpunk, said that the hacking by Bybit was due to “the design flaws in EVM.”
The EVM can drop to zero, and nobody would notice. “The problem is the Ethereum virtual machines hurt trust in the eco-system, which unjustly reflects bitcoin”, the expert stated.
Beck claims that the Bybit incident is not related to hardware wallets but rather the EVM’s difficulty in verifying the transactions.
He added that the Bitcoin ecosystem was free of these vulnerabilities.
The official incident report states that the Bybit attack was carried out through the infrastructure of Safe (Wallet), not the system itself.
Sygnia’s analysts conducted an investigation and found that the attacker had injected JavaScript into Safe (Wallets) resources in AWS S3 Cloud.
This script was only active on transactions that were associated with Bybit contracts and an unidentified test address. It shows the specific nature of this attack.
Hackers hid their tracks by replacing the altered files within two minutes of the theft.
On the computers of three of the signatories to the fake transaction, cached files that had been modified on 19th February were discovered. Codes were used to manipulate data during the approval process, including faking the address of the intended recipient.
The results of a forensic analysis of three hosts indicate that malicious code from the infrastructure of Safe (Wallet), is the cause of this attack. The Bybit infrastructure has not been compromised. “The investigation continues to complete the findings,” concludes the report.
The report, according to Binance’s founder Changpeng Zhao CZ (CZ), “is written in a vague manner and raises more questions than it answers”.
CZ believes that the results presented do not address a few important questions.
- How did “hacking the developers machine” happen?
- How was this device able to access a Bybit-managed account?
- How were hackers able to defraud several signatories at the Ledger Verification Stage?
- Why did attackers not target other targets?
- How can users and other multisignature wallet providers learn from this experience?
Martin Koppelman, the co-founder and CEO of Safe, Gnosis, gave CZ some clarifications. He repeated in general the thesauri from the report about the attack vector, but failed to elaborate on the deceitful methods that were used.
Koppelman estimates that the Bybit vault is one of the biggest and first victims. This is the reason why hackers attempted to hide their tracks.
He also discussed the steps being taken to improve transaction security.
Charles Guimet, CTO of Ledger’s CZ division, responded to CZ’s third question. He said that the hardware wallet company offers a variety of security solutions, but due to their technical nature, it’s difficult to incorporate them into Safe.
The Bybit hack has taught me that companies and financial institutions need to use storage systems designed for enterprise. “Placing $1.46bn into a Safe (Wallet), smart contract designed for retailers, with a signatory group should be an old relic,” stated the programmer.
The Federal Bureau of Investigation confirmed on 26 February that the hackers behind the Bybit attack were members of the North Korean hacker group TraderTraitor. This group is also known as Lazarus Group in the industry, APT38 and Stardust Chollima.
The bureau claims that the thieves are actively converting the stolen funds into digital currency such as bitcoins. The money is distributed to thousands of different addresses across multiple blockchains. The cryptocurrencies will be converted into fiat and laundered.
Bybit’s team successfully blocked QinShihuang as well, which was allegedly associated with hackers who had broken into the platform.
ZachXBT was the first to report on the launch of QinShihuang, a meme-coin. He said that an address linked to Lazarus transferred 60 SOLs before issuing the 500,000 QinShihuang Tokens. Trading volume reached 26 million dollars in three hours.
SEC closes cases against Cryptocurrency Companies
US Securities and Exchange Commission has stopped several investigations into cryptocurrency companies.
The Commission announced on 24 February that it had closed a complaint against an online broker, Robinhood.
According to Robinhood’s General Counsel Dan Gallagher, “We always respect the federal securities laws. We have never permitted transactions with them.”
The CEO said that the SEC decision was a positive one for the company and that it represents a return to “the rule of law.”
In pre-market trade, Robinhood’s shares rose by 3% on the news. The company’s shares have increased by 30.83% since the start of this year.
On February 25, Uniswap Labs announced the conclusion of its investigation and that it had no intention to file charges against the company.
This is an incredible achievement for DeFi. This case was closed with Uniswap’s representatives commenting that the result confirmed their technology as compliant and of long-term benefit.
ConsenSys’ CEO Joseph Lubin revealed on 27 February that the SEC had tentatively accepted to withdraw its lawsuit against ConsenSys.
He said that the final approval of the agency is still required to conclude litigation, although key agreements had already been made.
Now we can focus fully on the development. The year 2025 is going to be the most successful for Ethereum and ConSensys. “The transition towards a decentralised society is speeding up,” Lubin said.
The Commission also closed its case against Coinbase on the same date.
Mark Ueda, acting SEC chairman said: “It is time that the Commission corrects its approach to cryptocurrencies and creates a policy in a transparent way.”
The “Cooling Off” of Mem-coins
In addition to the new policy, SEC explained what meme-coins are. The experts of the Commission believe that such assets do not generally qualify as securities, but are closer to “collectibles.”
The agency does not require participants in the “funny coin” market to register. SEC has clarified that holders and buyers of these assets are not covered by securities law.
The fraud of meme coins can also be used as a basis to prosecute by law enforcement or other regulatory agencies.
This statement was not intended as a legal guidance, but to clarify how securities laws apply to cryptocurrency.
The interest in this segment is down significantly despite the SEC’s relatively positive stance.
The volume of meme-coin trades on exchanges that are not custodial was approximately 10% less than the peak of 19 January.
The trading volume, which had been rising and falling with LIBRA in the past, reached a maximum locally, before beginning to fall.
Pump.fun’s decline in “production capacity”, the so-called “meme token factory”, struggled to cope with the sharp drop in the number of tokens listed on Raydium, the decentralized Solana Exchange.
The GMCI Meme Index has dropped to levels seen in September. It reflects capitalisations of “funny coin” sizes.
The value of this currency has dropped by 48 % since the start of the year;
This graph also shows the rapid and nearly synchronised decrease in the capitalisation of coins on different themes, since their peak in December.
Media reports claim that the US Justice Department is investigating the LIBRA campaign and the involvement of Argentine president Javier Milieu. The authorities are also investigating the role of project founders Hayden Davis, Julian Pech and Manuel Terrones Godoy.
An initial report indicated that the individuals mentioned above were involved in LIBRA.
Authorities in Argentina are also reviewing the case. They’re examining the involvement of Milei and evaluating the possible offences such as abuse of authority, fraud, and influence peddling.
The president of Argentina has launched an investigation.
Bubblemaps linked LIBRA (the coin of US First Lady Melania Trump) and MELANIA to the same group on 17 February. KIP Protoco has denied any involvement with the project.
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