Crypto Takes a Hit as U.S. Stock Market Tumbles

Crypto Rally Cut Short as Bybit Hack and Stock Market Slump Weigh on Sentiment

A strong crypto market rally was derailed on Friday after a massive security breach at Bybit and a sharp decline in U.S. equities, sending Bitcoin (BTC) and other digital assets into the red.

Earlier in the day, crypto markets were surging after the U.S. Securities and Exchange Commission (SEC) signaled its intention to drop its lawsuit against Coinbase (COIN). The news drove a 5% jump in COIN shares, while Robinhood (HOOD), which has been expanding its crypto offerings, gained 4%. Bitcoin also rallied, nearing the $100,000 level.

Bybit Hack Sparks Market Jitters

The optimism was short-lived, as news broke that Bybit had suffered a staggering $1.5 billion hack—the largest known exploit in crypto history. The revelation sent shockwaves through the market, triggering an immediate sell-off. BTC and ether (ETH) dropped around 2% within minutes as traders reacted to the breach.

While Bitcoin attempted a modest recovery, the selling pressure intensified as U.S. stock markets took a turn for the worse.

Stocks Extend Losses, Dragging Crypto Lower

A disappointing Michigan Consumer Sentiment Index reading, which fell to 64.7 against an expected 67.8, added to concerns. Inflation expectations from the same report also edged higher, coming in at 3.5% versus the projected 3.3%.

Investor nerves were further rattled by reports of a new coronavirus variant, HKU5-CoV-2, discovered by researchers at the Wuhan Institute. Described as “strikingly similar” to the virus that caused the 2020 pandemic, the news reignited fears of potential disruptions.

By the end of the U.S. trading session, the Nasdaq had tumbled 2.2%, while the S&P 500 fell 1.7%. The 10-year U.S. Treasury yield slipped to 4.42%.

Crypto Markets Sink, Bitcoin Falls Below $95K

The negative sentiment spread across the crypto market, wiping out recent gains. Bitcoin slumped back to $95,000, down nearly 4% in 24 hours, while ether (ETH) dropped to $2,650. The CoinDesk 20 Index, which tracks the broader crypto market, fell 4.4%, highlighting the widespread downturn.

What started as a promising day for crypto quickly turned into a reminder of how fragile market sentiment can be—especially when both digital assets and traditional finance face headwinds at the same time.