In a twist few saw coming, crypto exchange Bybit is defying expectations after suffering the largest hack in digital asset history.
Despite losing $1.6 billion and watching its market share plunge, the platform has clawed its way back, fuelled not by Wall Street giants but by everyday traders. Here’s how retail investors turned the tide.
The $1.6 Billion Crisis
In January 2025, Bybit faced catastrophe when hackers drained $1.6 billion from its systems. The breach sent shockwaves through crypto markets, eroding trust and slashing the exchange’s market share from 10% to 4% overnight. Trading volumes plummeted, and skeptics questioned whether the platform could survive.
Block Scholes, an analytics firm hired by Bybit, later revealed the attack targeted Bitcoin and Ethereum markets hardest. Yet, while order books thinned temporarily, the bid-ask spread, the gap between buy and sell prices, stayed stable. This hinted at an unexpected resilience beneath the chaos.
Retail Investors Step Into the Spotlight
As institutions fled, Bybit leaned into an unlikely lifeline: retail traders. Days before the hack, the exchange had quietly launched Retail Price Improvement (RPI) orders, a feature reserved solely for non-professional users. The timing proved serendipitous.
Unlike traditional orders, RPI pools excluded institutional algorithms and bots, giving everyday traders access to tighter spreads and deeper liquidity. “This levelled the playing field,” the Black-Scholes report noted. By late March 2025, RPI orders accounted for over 50% of liquidity in major tokens like Bitcoin and Ethereum.
RPI Orders: Leveling the Trading Field
Bybit’s RPI system didn’t just attract retail traders; it supercharged their impact. The tool introduced 3-stall liquidity, stacking three layers of buy/sell orders near market prices. This created a buffer against volatility, ensuring smoother trades even during turbulence.
Data showed RPI orders dominated critical price zones within weeks. For example, BTC/USDT liquidity within 5–10 basis points of the mid-price surged, with RPI contributing up to 50% of order depth. Following this, spreads tightened, letting retail users often outpace institutional traders on price execution.
Liquidity Metrics Signal Strong Comeback
Bybit’s recovery became undeniable by April 2025. Key metrics like bid-ask spreads and order book depth normalised within a week post-hack. Crucially, RPI-driven liquidity helped trading volumes stabilise faster than analysts predicted.
“The disruption was sharp but brief,” Block Scholes emphasised. Despite a broader market downturn, Bybit’s 3-stall liquidity for RPI orders outperformed standard pools, proving retail participation could anchor markets. The exchange’s agility in deploying these tools became a case study in crisis management.
Regaining Market Share Against the Odds
Bybit’s market share tells the clearest success story. After bottoming at 4%, it rebounded to 7% within weeks, nearly doubling from its low. Competitors, on the other hand, grappled with slower recoveries as Bybit’s retail-first strategy lured users back.
The exchange also regained its spot as the world’s second-largest platform by volume. “RPI orders were pivotal,” the report stated, crediting them with restoring confidence. Retail inflows diversified Bybit’s liquidity sources, insulating it from over-reliance on institutional players.
Lessons Learned and the Path Forward
Bybit’s resurgence offers a blueprint for exchanges in crisis: prioritise accessibility. While security overhauls are inevitable post-hack, empowering retail traders can accelerate recovery. RPI’s success underscores a shift toward democratising finance in crypto.
Looking ahead, Bybit plans to expand RPI features, aiming to cement loyalty among its retail base. As Black and Scholes concluded, “Liquidity is king, but it’s the little guys who crown it.” For an industry often dominated by whales, that’s a revolution worth watching.
In a landscape where hacks spell doom, Bybit’s tale is one of reinvention. By betting on everyday investors, the exchange didn’t just survive; it redefined resilience.
