Ethereum Flash Volatility Linked to Bybit MM Flaw

A Bybit market-maker grid malfunction triggered dramatic ETH moves across major exchanges, sparking about $90 million in short liquidations and a surge in futures volume.

Rich by Coin

2026-02-09

Ethereum price volatility surged in the Ethereum market due to a suspected error in Bybit’s internal market-making (MM) operations, triggering extreme volatility and large-scale liquidations. Last 8th dawn, abnormal volatility in the ETH market led to widespread investor losses. Industry analyses pointed to a strategic error by Bybit’s internal MM as the spark of this incident. On the 8th (local time) at around 1:10 a.m., Ethereum prices began to swing violently across global exchanges, including Bybit.

At the time, ETH/USDT on Binance oscillated rapidly, ranging from a high of 2121.70 dollars to a low of 2009.54 dollars. Bybit’s ETH/USDC futures also traded between a high of 2131 dollars and a low of 1993 dollars over several minutes, showing extreme volatility. A one-minute, $120 swing epitomized the moment. Such rapid volatility led to large-scale liquidations within minutes.

According to digital asset data analytics outlet Watcher.Guru, approximately $90 million worth of short positions across BTC and ETH were liquidated in the 30 minutes when the volatility spiked. Industry insiders point to a flaw in Bybit’s market-making system as the cause of the incident. BWEnews, via X (formerly Twitter), suggested that “Bybit’s market-maker grid strategy malfunctioned, triggering abnormal price swings in Ethereum.” On-chain analyst Ai Yi noted that Bybit’s 24-hour ETH futures volume surged to $21.58 billion, ranking first globally, up 354.01% YoY, suggesting that abnormal market-maker activity was reflected in the trading data. Capital Ventures also attributed the incident to a fatal P0-grade fault by Bybit’s internal market-maker, Time Research, arguing that the ultra-fast volume spikes disrupted the market and that the estimated losses could exceed $200 million.

As of now, Bybit has not issued an official statement about the volatility event. Investors have criticized the exchange for harms to retail traders caused by the MM’s technical flaw and called for a clear explanation and compensation if warranted. The community expects that Bybit’s silence will hurt trust in the exchange, with close attention to any forthcoming official remarks.