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Crypto markets signal resilience despite Bybit worrisome hack
Every market will inevitably face challenges, and crypto is no exception. However, a key sign of maturity is how the market reacts to negative events. The recent Bybit hack, which occurred late last week, is a case in point—while significant, it did not trigger widespread panic.
Thus, we can point out two potential positive takeaways:
1) As shown in the chart, ETH prices (and the broader crypto market) experienced limited impact and have already rebounded, surpassing pre-incident levels.
2) Allegedly (pending audit confirmation), the exchange replenished its ETH reserves after a $1.4 billion exploit.
Market Highlights
Bybit suffered the largest crypto hack in history
On February 21, a hacker stole $1.4 billion from Bybit, after accessing an Ethereum cold wallet and exploiting their flawed security practices.
The exchange claims to have filled the gap in its ETH reserves after the incident.
Despite the events, market impact was relatively minor compared to past events like BOJ hikes, which suggests a growing market maturity when it comes to short-term shocks.
Digital ledgers to settle transactions in ECB
The European Central Bank is planning to establish a system to use a digital ledger-based system to settle transactions in their database.
This could signal a significant institutional use case for blockchain technology, marking another step towards broader institutional adoption.
SEC new unit to protect against fraud in crypto
SEC announced the creation of a new unit aimed at protecting investors from frauds related to crypto and AI.
This once again underscores the new administration’s focus on advancing security and regulatory developments in the crypto industry, potentially serving as another strong tailwind for future adoption.
Market Metrics
The NCITM had another sideways week (-1.3%), with strong headwinds like the Bybit exploit widening the gap between NCITM and other asset classes. Given this month’s challenges and ongoing regulatory developments, this movement was largely expected. However, as we’ve noted in previous insights, these long-term developments could become a strong catalyst for crypto performance in 2025.
Dogecoin’s performance and staying power across multiple market cycles suggest it is not “just another one of those memecoins”.
Over the past decade, DOGE has outperformed even Bitcoin, delivering over 133,000% in returns, nearly 1,000x BTC’s gains in the same period. Despite deep drawdowns during bear markets, Dogecoin has shown remarkable structural resilience.
Following each major rally, it has consistently formed higher lows, a pattern of long-term appreciation and compounding strength.
Historically, Dogecoin has closely mirrored Bitcoin’s movements, often peaking a few weeks after. While 2024 saw Bitcoin dominate headlines following landmark ETF approvals, DOGE still followed its trajectory, though it has yet to stage its typical delayed breakout.
As macro uncertainty continues to fade and momentum returns to the market, retail participation is likely to accelerate, setting up conditions in which Dogecoin has historically thrived.
At the same time, regulatory clarity around Dogecoin has improved. The SEC recently confirmed that most memecoins are not considered securities, comparing them to collectibles. Additionally, they clarified that proof-of-work rewards, like those earned from mining DOGE, also fall outside that scope. These developments further legitimize Dogecoin’s role in the ecosystem, potentially setting the stage for its next paw up, especially as it now holds a firm base around $0.17, nearly 3x its pre-rally level before reaching a new all-time high in the last cycle.
In addition to its long-term performance, Dogecoin stands out as an asset that behaves asymmetrically, offering investors a rare source of uncorrelated returns across both traditional and crypto portfolios. With an average correlation of just 15% to major assets, DOGE’s price action remains largely detached from broader macroeconomic trends, reinforcing its value as a true diversification tool.
Dogecoin demonstrates significant independence within the crypto market, with its correlation to Bitcoin at only 31% and to Ethereum at 37%. This divergence stems from unique capital flow dynamics, where higher-beta assets like DOGE tend to rally after blue-chip crypto assets reach major milestones.
While Bitcoin slowly evolves into a digital store of value and Ethereum powers decentralized infrastructure, Dogecoin remains largely a cultural asset, thriving on narrative momentum and crowd psychology, offering explosive upside when risk appetite surges.
For investors seeking an upside without mirroring the behavior of core holdings, Dogecoin offers a compelling case. Its ability to decouple from market trends while tapping into more speculative surges makes it a powerful, though unconventional, addition to a portfolio with wildcard potential.
Research Newsletter
Each week the 21Shares Research team will publish our data-driven insights into the crypto asset world through this newsletter. Please direct any comments, questions, and words of feedback to research@21shares.com
Disclaimer
The information provided does not constitute a prospectus or other offering material and does not contain or constitute an offer to sell or a solicitation of any offer to buy securities in any jurisdiction. Some of the information published herein may contain forward-looking statements. Readers are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties and that actual results may differ materially from those in the forward-looking statements as a result of various factors. The information contained herein may not be considered as economic, legal, tax or other advice and users are cautioned to base investment decisions or other decisions solely on the content hereof.
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