Crypto Carnage: $2 Trillion Evaporates in Brutal First Half of 2025

The crypto market got steamrolled by a perfect storm of regulatory crackdowns, leveraged liquidations, and good old-fashioned panic selling.

Blood in the digital streets

Top coins bled out double-digits as contagion spread from altcoins to blue-chips. Even Bitcoin wasn't spared - dipping below its psychological $50k support level before dead-cat bouncing.

Who's holding the bag?

Retail traders got mauled (again), while institutional players quietly accumulated at fire-sale prices. 'Buy the dip' tweets from crypto influencers aged like milk left in a Bitcoin mining rig.

The silver lining? Every crypto winter eventually thaws. Just ask the hedge fund managers now repositioning their narratives - and their portfolios.

Primary Causes of Fund Losses in the Cryptocurrency Sector

CertiK’s data reveals that $1.7 billion of the stolen funds were due to breaches of wallet security. Additionally, $410 million was lost to 132 different phishing scams. February witnessed the year’s largest single incident, where a security vulnerability resulted in a $1.5 billion loss from Bybit’s staked ETH wallets.

In May, the Cetus Protocol fell victim to a massive hack exploiting a smart contract flaw, resulting in $225 million in losses. sui validators managed to recover $162 million from this incident. Notably, losses from smart contract vulnerabilities alone soared to $229 million in May, a stark increase from the $5 million recorded the previous month.

Concerning Spike in Physical Attacks

The report also highlighted a worrying increase in physical attacks. The first half of the year recorded 32 incidents involving violence, kidnapping, and ransom attempts. France saw the highest number of physical assaults, including a kidnapping attempt on the family of Paymium’s CEO.

Efforts from WHITE hat hackers, in collaboration with law enforcement and exchanges, have resulted in the recovery of approximately $187 million.

The increasing complexity and violence associated with attacks on the cryptocurrency sector underline the urgent need for stronger security measures. Weak private key management has been identified as one of the most critical vulnerabilities. Frequently, keys are stored in insecure environments, not encrypted, or controlled by a single entity, making them easy targets for hackers. This single point of failure continues to represent one of the industry’s most significant risks, leading to multi-billion dollar losses.