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Polymarket traders don’t see Kelp socializing losses after $292 million exploit

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Polymarket traders don’t see Kelp socializing losses after $292 million exploit

A Polymarket contract on whether Kelp DAO will spread the losses from the weekend’s $292 million exploit beyond those directly affected is pointing to a clear answer: probably not.

Bettors are giving a 14% chance that Kelp will “socialize the losses,” or implement a mechanism forcing rsETH holders on Ethereum, which wasn’t hit, to share the pain of users on other chains.

The attackers drained roughly 116,500 rsETH from a LayerZero-powered bridge that held the reserves backing the token across more than 20 blockchains. That left parts of the system undercollateralized, with some holders effectively owning tokens no longer fully backed by ether (ETH).

“Socializing the losses” would mean Kelp redistributes the shortfall across all rsETH holders, including those on the Ethereum mainnet, rather than leaving losses concentrated among users and protocols tied to the compromised bridge.

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The most widely cited precedent of this approach came in 2016, when Bitfinex imposed losses on all users after a $60 million hack, effectively mutualizing the hit to avoid shutting down.

More recently, derivatives exchanges have used variations of the concept through auto-deleveraging (ADL), in which profitable positions are forcibly reduced to cover losses when insurance funds are exhausted.

During the October flash crash, ADL mechanisms were triggered across some venues, closing out even market-neutral positions and leaving traders exposed. These moves are rare and controversial, but they have been used as a last resort to stabilize systems under stress.

Kelp’s situation is more complex. The exploit drained the reserve backing rsETH across more than 20 chains, leaving losses fragmented across different user groups and platforms.

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Holders on affected networks face impaired backing, while others remain relatively insulated. Any attempt to equalize losses would require coordination across chains, clear accounting of liabilities, and a willingness to impose losses on users who may not see themselves as affected.

That makes a clean, system-wide redistribution both technically and politically difficult, which may explain why Polymarket traders are approaching the question with skepticism.

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Crypto World

Bitcoin Bull Score Index Rebound Fails to Quash 2022 Bear Market Fears

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Bitcoin Bull Score Index Rebound Fails to Quash 2022 Bear Market Fears

Bitcoin (BTC) price metrics are showing relief this month, but the risk of repeating the 2022 bear market remains.

Key points:

  • Bitcoin’s Bull Score Index combined price metric reaches its highest levels since October last year.

  • The relief may be short-lived, analysis warns, pointing to the 2022 bear market.

  • Crypto sentiment reaches its most bullish since January, per the Crypto Fear & Greed Index.

Bitcoin Bull Score Index ditches “bearish” zone

New data from onchain analytics platform CryptoQuant place the spotlight on the Bitcoin Bull Score Index (BSI).

Bitcoin has finally entered “neutral” territory with its push to $78,000, the latest BSI data confirms, with the Index climbing to its highest since October 2025.

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BSI incorporates nine price metrics to give an overall impression of performance. Since the bear market began, it has been sharply bearish — just as in the early stages of the previous bear market four years ago.

“First time in this bear market that the Bull Score Index enters neutral zone (50),” CryptoQuant contributor Julio Moreno noted in an X post on Wednesday.

Bitcoin Bull Score Index. Source: CryptoQuant

Moreno cautioned that despite the pressure being off for now, BSI also had a brief cooling-off period before the 2022 bear market continued.

“In March 2022, the Bull Score entered neutral territory for about a week, and then the price resumed its decline,” he added.

Should history repeat, attention will be on the Index’s performance into the April monthly close, as BTC/USD attempts to break out of a multi-month range.

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Examining BSI readings last week, with price around $74,000, CryptoQuant contributor Arab Chain described a “balance between supply and demand forces.”

“On the other hand, the current BSI reading shows that the market is still far from the area of strong optimism (above 60), which typically indicates strong bullish conditions, while also remaining above the zone of extreme pessimism (clearly below 40),” they wrote in a “QuickTake” blog post. 

“This places the market in a transitional phase, as investors await new catalysts to determine the next direction.”

Sentiment edges to most bullish since January

Other signs of a broader market recovery come from crypto trader sentiment.

Related: BTC price due new highs: Five things to know in Bitcoin this week

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According to the Crypto Fear & Greed Index, a classic lagging indicator that uses a basket of factors to reflect the mood among investors, conditions are at their least negative since mid-January.

Fear & Greed measured 32/100 on Wednesday — still within its “fear” zone while like BSI also approaching the “neutral” bracket.

The Index value has nearly tripled in a little over a week.

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Crypto Fear & Greed Index (screenshot). Source: Alternative.me