On February 24, Ether's price dropped by 5% despite reports of a large purchase by crypto exchange Bybit. This was unexpected for traders who anticipated a price increase following the recent hack and asset buyback for loss coverage.
Trading expectations and reality
Some traders expected Bybit's acquisition of ETH to compensate losses after the hack on February 21 would push prices higher. However, this did not happen, taking the market by surprise.
Factors influencing the price drop
Despite significant buying pressure and Bybit recovering more than half of the stolen Ether, a $700 million market buy proved challenging. Price declines were also influenced by traders unwinding positions upon realizing aggressive ETH purchases on the open market were not taking place.
Risks of Ethereum multisig setups
The Bybit hack highlighted risks associated with Ethereum's multisig setups, revealing vulnerabilities in defense mechanisms compared to simple hardware wallets. Additionally, low staking yield and ETH supply growth contributed to Ether's price decline.
Ether's price decline is linked to hacker attempts and excessive expectations among leveraged traders, as well as challenges in staking integration in future ETFs.
