Deepseek analysis: If Bybit is forced to liquidate due to the theft of all ETH from the cold wallet, it may have the following multidimensional impacts on the cryptocurrency market. Combined with the background of the event and historical cases, the comprehensive analysis is as follows: --- 1. * * ETH price short-term plunge and market liquidity shock** -Selling pressure surges: Assuming the total amount of stolen ETH exceeds 500000 (the sum of native ETH and various derivatives, valued at approximately $1.44 billion), attackers may quickly sell through DEX or over-the-counter channels, causing a sharp drop in ETH prices. If the exchange needs to further liquidate other assets to make up for losses, it may trigger a chain of market sell offs. -Liquidity crisis: Large scale selling may lead to insufficient market depth and exacerbate slippage. For example, webpage 5 mentions that hackers sell LSD assets (such as stETH and mETH) at low prices through multiple DEX. If similar operations are scaled up, it will lead to a sharp deterioration of ETH liquidity in the short term. --- 2. The chain reaction between the derivatives market and leveraged contracts** -The surge of leveraged contract liquidation: The sharp drop in ETH prices may trigger forced liquidation of a large number of long contracts, further amplifying price fluctuations. For example, after Coinrail was hacked in 2018, market panic triggered a 12% daily drop in Bitcoin, and a similar mechanism may repeat itself. -Exchange credit risk: If Bybit is unable to fully compensate users for their assets, it may lead to a run on user withdrawals, causing liquidity pressure on other exchanges (such as the 2022 FTX event). Although Bybit currently claims that other wallets are secure and withdrawals are normal, in extreme cases, user trust collapse may spread. --- 3. * * Regulatory review upgrade and increased compliance costs** -Regional license risk: The Hong Kong Securities and Futures Commission has previously included Bybit in the warning list. If the incident worsens, it may accelerate mandatory requirements from global regulatory agencies for exchange cold wallet management and smart contract audits. -Investor protection measures: Regulatory measures may promote stricter asset segregation policies (such as cold wallet multi signature verification mechanisms), increase exchange operating costs, and indirectly affect market innovation speed. --- 4. Industry security trust crisis and changes in user behavior** -Doubt about Cold Wallet Technology: In this attack, hackers tampered with the logic of smart contracts by forging signature interfaces, exposing potential vulnerabilities in multi signature cold wallets. If the security of cold wallets is widely questioned, users may turn to self hosted solutions (such as hardware wallets) to accelerate the trend of decentralized storage. -The overall market confidence has been dampened: Historical data shows that major security incidents (such as the $500 million theft of Coincheck in 2018) often lead to a short-term decline in the total market value of the cryptocurrency market. This incident may prompt investors to shift towards more conservative asset allocation strategies. --- 5. The Long term Impact of ETH Ecosystem** -Pledge and DeFi liquidity contraction: Stolen assets include pledged derivatives such as stETH. If attackers sell, it may affect the liquidity of protocols such as Lido and even trigger pressure to redeem pledged assets. -* * Technical roadmap adjustment * *: The event may drive the Ethereum community to accelerate the popularization of smart contract security standards (such as formal verification), or promote the adoption of Layer2 solutions to reduce mainnet risks. --- Summary and historical comparison In similar events, the market reacts violently in the short term but gradually recovers in the long term. However, if Bybit experiences systemic risk due to extreme circumstances, its impact will far exceed the volatility of a single asset price, potentially reshaping the exchange's security paradigm and regulatory framework. It is recommended to closely monitor the progress of Bybit's subsequent fund recovery and regulatory developments.