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On February 21, 2025, the crypto exchange Bybit bore the burden of theft like no other in history as robbers drained $1.46 billion from one of its cold wallets. The incident took place during a normal internal transfer between Bybit's hot wallet and one of its offline multisignature cold wallets. Hackers manipulated the smart contract interface associated with the wallet and tricked it into approving a malicious transaction where funds would be diverted to an unknown address. In total, more than 400,000 ETH along with associated staked tokens (stETH, mETH, cmETH) were drained from the wallet.
Blockchain sleuths quickly attributed this hack to North Korea's infamous Lazarus Group, given enough overlaps to their previous hacks. Barely a few minutes after the breach, the thieves began laundering their loot, swapping hundreds of millions in stolen tokens for ETH to avoid freezes, and laundering cash through about 50 wallet addresses and exchanges to obscure their trail.
The response from Bybit was immediate and totally within hours of the occurrence, denying claims of the hack by its CEO Ben Zhou through social media assurances that other wallets remain secure, although this temporarily halted withdrawals. Amazingly, however, Bybit restored full withdrawal functionality just 12 hours later after securing emergency liquidity to meet customer demands. Zhou said every pending withdrawal has been processed and apologized for the inconvenience to users.
Behind the scenes, Bybit reportedly even lined up bridge loans from industry peers such as Binance and Bitget to shore up funds. The exchange promised a detailed incident report and new security measures to prevent future breaches. Thanks to these interventions, it averted a larger contagion or exchange run and settled fears of another FTX-like collapse. But the psychological shock to the market was already at play while Bybit set in motion its operational stabilization measures.
The Bybit mega-hack sent a wave of panic through the crypto markets, and the most speculative assets-the meme coins-bore the cost heaviest. An army of traders fled to de-risk after the news of the hack and rushed to exchange all volatile tokens with stablecoins or cash, adding to the already evident big sell-off. Bitcoin lost about 20% from its recent high (from about $109K down to $87K), while Ether fell around 8% (around mid-$2,800s to low $2,600s).
Smaller altcoins fared worse, and an index of popular meme coins cratered 37% in the immediate aftermath. This "Meme Coin Index" crash of 36.9% reflected a sudden change of mood toward risk aversion as investors dumped high-yield, hype-driven coins. Bybit itself saw billions torn out, as over 21,000 BTC and $2.25B in USDT was withdrawn from it in a matter of days as users withdrew their funds from the exchange. Liquidity thinned between exchanges, and the market emotions swayed to be fearful, and the once king's coins started to decline along.
Meme coins, notorious for their erratic price movements right from the start, quickly lost ground following recent marks. For example, on February 21, after some news regulatory attention, Dogecoin (DOGE), the first meme coin, had peaked to approximately $0.26, before dropping almost 10 percent to around $0.235 on the very same evening after circulation. It continued its process of decay in the following day, trading for a little while near $0.20 rendering a little over a month of gradual gain null and void. Shiba Inu (SHIB), the second most important meme token, also fell considerably.
It was noted by one analysis that as holders dumped volatile cryptos for stablecoins, these two immediately slumped down to multi-week lows. Far from it were new meme coins not spared. On the day the hack occurred, PEPE, which runs on the Ethereum platform and was around 10% down, got a bit of dead cat bounce, having recovered by 6% the next day. Likewise, well-loved community tokens like FLOKI and BONK saw double-digit percentages losses nor were they immune from the post-hack sell-off.
All fizzled out with the hype and trading volumes, which eventually dropped on meme coin mania. Speculation on meme coins had begun to show signs of cooling off in early 2025, and the Bybit incident did serve to speed up that process. Indeed, the numbers currently being churned out paint quite a dramatic picture: by early March 2025, the entire meme coin market capitalization had plummeted to about $54 billion, down 56.8% from a three-month prior high of $125B. In other words, from December to March, a whopping $70 billion paper value associated with meme tokens was ripped from the fabric.
Trading also dried up, with a 26% month-on-month backing loss in meme coin volumes in the month following peak. It was at one point in January that exaggerated meme trades accounted for more than 10% of the entire crypto trading volume, but by April, that number had dwindled to less than 4%. That means that many traders have now rotated out of meme coins, at least for the time.
The performance of the major meme coins, both before and after the hack, highlights the decline-Dogecoin (DOGE): Approximately -22% over the month that surrounded the hack. (It continues to languish at about $0.26 in late February, down to about $0.21-0.24-scarping a good chunk of market cap.
Shiba Inu (SHIB): Roughly -10% in that same period, with trade prices hovering around $0.00001 since the higher levels could not be sustained.
Pepe (PEPE): Double-digit percentage declines; down around ~10 % still from pre-hack levels despite a short-lived bounce.
Floki (FLOKI) & Bonk (BONK): Each saw steep sell-offs exceeding 10-15% in the weeks after the hack, reflecting a broader downturn across smaller meme tokens.
Such downfalls in the household-name meme coins dragged all sectors further down. Dogecoin itself represents roughly half of meme-coin market value; its fall naturally biased the scale to have an outsized effect. The confidence crisis was later observed within social metrics too. With this downturn came a significant decline in social media buzz about meme coins in crypto.
Search interest on Google Trends indicated that “meme coin” attracted a perfect score of 100 in mid-January and plunged to only 8 by early March worldwide. Such a huge drop in search interest indicates that the latent intrigue and FOMO (fear of missing out) regarding meme tokens have almost disappeared since the hack and the market pullback. Even on Twitter and Reddit-a good part of the discussion about meme coins-has cooled.
According to LunarCrush, only unusual events, such as Musk tweets, would cause a spike in the number of mentions of meme coins after March 2022.
Put simply, the activities in trading of and the chit-chat in the social circuits about meme coins have seen a dramatic fall, thus indicating growing caution.
One real thing to understand is that the slow fade into speculation isn't just a one-exchange hack, but a whole-other Bybit incident following an already cooling market. As far back as that hack, further macroeconomic and psychological factors were instilling caution to the investors. Bitcoin's rise to $109K in January was buoyed by this very optimism, nay, sheer meme-like frenzy in certain altcoins, only to see that in February the song changed with fears of inflation, rises in interest rates, and geopolitical tensions that limited risk appetite.
That hack thus catalyzed what was already a weak downtrend, sending the speculators into full retreat. It was a classic case of risk aversion-those traders scrambled for safety-and sell pressure was on not just on the unsafe meme coins but also on the fundamentally sound ones.
The meme coins have also been hurt by other scandals followed by realizations about the sector in general. Between late 2024 and early 2025, a multitude of sad entities of a high profile flaunted terrible pr establishments or imploded. One such misfortunes was that of a meme token called LIBRA, which was ironically promoted by Argentine president Javier Milei; the token collapsed 95% on the backdrop of insider trading allegations. Other novelty tokens parading celebrity names or those anchored by some influencers suffered similar fates.
Following the Dave Portnoy "Greed" token rug pull and an unsuccessful attempt by Kanye West to release a "YZY" coin, celebrities' coins have now started to be viewed suspiciously. All these scenarios have impressed upon investors the understanding that most meme coins operate as zero-sum games or outright gambles. As one analyst put it, retail participants are slowly waking up to the behaviours of zero-sum games when it comes to chasing meme coin pumps. This means that people are learning that for every huge winner out there during a meme coin frenzy, there lie tons of losers, especially when the music halts.
Regulatory signals are also playing a role in the shifting psychology. Early 2025 brought a mix of crackdowns and clarifications from regulators. Notably, in February the U.S. SEC made a surprising statement that most meme coins do not qualify as securities, essentially treating them more like collectibles or speculative assets than regulated financial instruments. While this removed some legal uncertainty (exchanges no longer fear listing meme coins as much), it also underscored that buyers have little protection since these tokens fall outside traditional investor safeguards.
At the same time, U.S. regulators eased pressure on major crypto players, dropping the case against Coinbase and showing openness toward lighter DeFi regulation. But the Bybit hack jolted the conversation, exposing how one breach can threaten billions.This has prompted renewed calls for stricter exchange security standards and oversight to protect users.
In the wake of the hack, some lawmakers and analysts argued that the industry needs stronger crypto regulations and improved security measures to restore trust. The overall regulatory climate is still evolving, but the trend appears to be toward weeding out outright fraud, which many meme coin rug pulls are, while encouraging better risk management. Heightened scrutiny can have a cooling effect on speculative excess, at least in the short term, as large exchanges and investors become more selective about which coins to support.
The question on everyone’s mind: Is the meme coin hype cycle over? On crypto Twitter and beyond, prominent voices are weighing in on this debate. Elon Musk, who was arguably a major catalyst of past dog-themed coin rallies, has struck a more cautionary tone lately. Musk likened meme coins to going to the casino, fun perhaps, but not something to bet your life savings on. This remark from the Tesla CEO and Dogecoin’s most famous cheerleader sent minor shockwaves through the community, as it was seen as an acknowledgement that the frenzy had gone too far.
In a similar vein, Matt Hougan, CIO of Bitwise Asset Management, stated that we’re witnessing the end of the meme coin boom, suggesting the speculative fever that defined 2024’s crypto rallies has broken.
Crypto analysts and fund managers have pointed to hard data to back up these sentiments. Veteran trader Lark Davis openly questioned whether this is “the end of the meme coin supercycle,” echoing many investors’ doubts as they watch prices tumble.
Haseeb Qureshi, managing partner at Dragonfly Capital, commented that current sentiment in the meme coin space is extremely low and posited that the meme coin cycle of this market cycle has likely ended. On a podcast, Qureshi and fellow VCs noted that retail traders are becoming disillusioned after chasing numerous get rich quick token launches that ultimately fizzled. Even the infrastructure supporting meme mania is struggling. The team discussed how Pump.fun, a popular meme coin launchpad, saw a huge drop-off in activity and new token launches in Q1 2025 as the frenzy subsided.
That said, not everyone believes meme coins are “dead.” Crypto exchange insiders have observed that each market cycle tends to bring a new twist on speculative tokens. One exchange’s research desk noted that while Q1 saw a steep decline, meme coins still established higher baselines compared to previous cycles, meaning the floor is gradually rising after each boom and bust.
There are also contrarian traders who see the current pessimism as a sign of an interim bottom. For example, after the hack induced dip, some aggressive buyers started positioning for a rebound in beaten down meme coins like PEPE.
Coinglass data showed long positions far outweighing shorts on PEPE after its drop, indicating speculators betting on a bounce. These traders argue that as soon as crypto markets show signs of recovery, the highly viral nature of meme coins could spark another round of rallies. Social media sentiment can turn on a dime. A single viral TikTok or a quirky Elon tweet could revive interest.
Furthermore, meme culture remains a powerful force. Dogecoin, despite all its ups and downs, still has a passionate community that holds for ideological or nostalgic reasons, the “1 DOGE = 1 DOGE” crowd that measures success in laughs as much as profits.
Some analysts maintain optimism that if Bitcoin and Ethereum regain bullish momentum later in 2025, a “meme spring” could follow, with the stronger meme coins like DOGE and SHIB reclaiming lost ground and new themed coins emerging. In essence, while many experts warn that the speculative excess has cooled and perhaps this time is different, a few remind us that they’ve declared meme coins dead before, only to be surprised by the next resurgence.
In the wake of Bybit’s $1.46 billion hack, the speculative fire around meme coins has undeniably cooled off. Huge sums of hot money have exited these assets, price charts are a sea of red, and the buzz that once filled forums and group chats has died down to a whisper. The incident served as a reality check, exposing the fragility of trusting anonymous tokens on centralized platforms and reinforcing a more cautious, risk averse mindset in the crypto community.
By multiple measures, market cap down over 50 percent from the peak, trading volumes and Google searches down dramatically, the meme coin hype cycle has hit a wall. Even the psychology has shifted. Where 2024 was defined by almost irrational exuberance, early 2025 has introduced a healthy dose of skepticism and fear. Traders are now asking harder questions about security and sustainability, rather than just chasing the next 100x moonshot.
However, it’s premature to write the obituary for meme coins outright. Crypto history shows that hype is cyclic. After every boom comes a bust… and often, another boom. It’s possible we are witnessing a temporary correction, a cooling off period that flushes out the excesses such as scam tokens, overleveraged bets, and inexperienced speculators, and lets the market consolidate.
Hardcore believers and communities, think the Doge Army or SHIB loyalists, are still intact and waiting for the next catalyst. Moreover, not all the money has vanished. A total meme sector value of approximately 50 billion dollars is nothing to sniff at, and it suggests a base of holders who haven’t completely abandoned the theme. Should overall crypto market conditions improve or a new pop culture trend capture imaginations, meme coins could well roar back. Innovations like combining memes with utility, such as meme coins that also serve as game tokens or AI influencers, are already being explored, which could spark fresh speculative narratives.
In summary, the meme coin frenzy has deflated significantly in the aftermath of Bybit’s hack, contributing to a more sober atmosphere in crypto trading. Many see this as the end of an era, the point where the market’s wildest bets finally face gravity. Increased risk awareness and looming regulations support the idea that the craziest days of meme coin mania are behind us, at least for now. Yet, crypto markets have a way of reinventing speculation.
Whether the meme coin hype is truly fading into history or merely regrouping for the next run remains to be seen. For enthusiasts and skeptics alike, the Bybit saga and its ripple effects offer a clear lesson: exuberance can vanish as quickly as it appeared, and in the crypto world, one must always expect the unexpected, including the possibility that what’s cooling off might one day heat up again.
