Binance hack risks liquidity squeeze as Bank of England looks set to hike

what happened

Bitget Wallet's Lacie Zhang says the biggest risk from the $6.3 billion Binance hack is a confidence shock to centralized crypto infrastructure. Prolonged withdrawal restrictions or doubts about exchange reserves could push lenders and market makers to step back, draining liquidity across platforms. According to LSEG data, bitcoin fell 2.8% to $76,648 and ethereum dropped 2.1% to $2,213.

In the U.K., annual inflation climbed to 3.5% in September, and GDP grew 2.1% in August, well above the 1.6% consensus. LSEG data show markets price a 99.7% chance of a Bank of England rate rise on November 5. Deutsche Bank, however, warns that rates could stay higher for longer if the energy supply shock persists.

Handelsbanken expects Norges Bank to hold its policy rate at 4.5% next week, though the December meeting remains open. In Germany, October inflation fell to 2.8% from 3.3%, but Commerzbank attributes much of the drop to a temporary cut in energy taxes and expects inflation to rise above 3% again by the turn of the year.

why it matters

The key questions for markets are how durable the tightening in Britain and Norway will be amid the energy shock, and how the Binance hack will affect crypto assets. Sterling may gain support from an expected rate rise, but doubts about further hikes limit the upside.

market impact

Crypto: liquidity and confidence worries weigh on bitcoin and ethereum; sterling: expected hike supports it, doubts about more hikes cap it

• ▼Bitcoin pressure down — confidence concerns about exchanges and liquidity drain across crypto markets
• ↔GBP mixed — expected Bank of England hike against doubts about further tightening

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