Crypto News: Market Update August 2024
The month of August 2024 was filled with significant economic and financial events that impacted both international and national markets. From drastic developments in the Japanese stock market to decisions made by the U.S. Federal Reserve, investors and policymakers faced major challenges and opportunities. This market update provides an overview of the key events in August 2024, ranging from a historically large stock market crash in Japan to changes in U.S. monetary policy and renewed insight into U.S. economic growth.
August 5: Japanese Stock Markets Experience Largest Decline Since 1987
On Monday, August 5, Japanese stock markets saw their largest single-day drop since the “Black Monday” crash of 1987. The Nikkei index fell by 12.4%, driven by concerns over a potential recession following disappointing U.S. employment data and a sharp rise in the yen, which hit a seven-month high against the dollar. The decline pushed the Nikkei into a bear market, with a total depreciation of 27% since its peak on July 11. The Japanese banking sector was hit hardest, while the broader Topix index dropped by 12.2%. Analysts pointed to a massive sell-off by investors, partly driven by the unwinding of yen-funded investments, as a key factor behind the crash. (Source: The Economist)
August 7: Ripple Ordered to Pay $125 Million Fine for Misleading Sale of XRP Tokens
A Manhattan court ordered Ripple Labs Inc. to pay approximately $125 million in fines to the U.S. Securities and Exchange Commission (SEC) for the misleading sale of the cryptocurrency XRP. This amount is a fraction of the $2 billion in fines initially sought by the SEC. The SEC had sued Ripple, along with CEO Brad Garlinghouse and co-founder Chris Larsen, in 2020 for illegally raising more than $1.3 billion through an unregistered securities sale of XRP. The claims against Garlinghouse and Larsen were dropped in October. Ripple’s CEO stated that the company respects the court’s decision and now has clarity to move forward. The SEC emphasized that securities laws apply to all investment contracts, regardless of the technology or labels used. (Source: Reuters)
August 14: Annual Inflation Drops to 2.9% in July, Lowest Since 2021
In July, the consumer price index (CPI) rose by 0.2%, bringing annual inflation down to 2.9%, the lowest since March 2021. The core CPI, which excludes food and energy, also rose by 0.2% on a monthly basis, reaching an annual rate of 3.2%. These figures met expectations. The inflation increase was largely driven by a 0.4% rise in housing costs, accounting for 90% of the total inflation growth. Energy prices remained stable, while food prices rose by 0.2%.
Although inflation is slowly returning to the central bank’s 2% target, some costs, such as car insurance and rental prices, remain stubbornly high. The Federal Reserve is now considering potential interest rate cuts, with a slight chance of a quarter-point cut in the next meeting in September. At the same time, concerns about a slowing labor market could further support the possibility of additional rate cuts. (Source: CNBC)
August 23: Fed Chair Powell Announces Policy Shift: Time for Rate Cuts
Fed Chair Jerome Powell announced in a speech at Jackson Hole that the time has come to cut interest rates. This marks a significant policy shift for the Federal Reserve, which had been focused on fighting inflation until now. Powell emphasized that further cooling of the labor market would be undesirable and expressed confidence that inflation is within reach of the central bank’s 2% target. The Fed is now expected to lower rates at the September meeting, with the size of the cut being the main question. Financial markets reacted positively to Powell’s remarks, with rising stocks and falling bond yields. Powell’s speech suggested that a series of rate cuts might be on the horizon, potentially starting with a 50-basis-point cut. (Source: Reuters)
August 29: U.S. Economic Growth for Q2 Revised to 3.0% Due to Strong Consumer Spending
The U.S. economy grew faster than initially thought in the second quarter, mainly due to strong consumer spending. Gross domestic product (GDP) increased at an annualized rate of 3.0%, an upward revision from the previously reported 2.8%. This growth was supported by a 2.9% rise in consumer spending, higher than the earlier reported 2.3%. While business investments, exports, and inventory investments were downgraded, recovering corporate profits provided a positive boost. Both financial and non-financial companies saw profits rise, more than offsetting the previous decline in the first quarter. Despite slowing momentum from a cooling labor market, the U.S. economy continues to expand. (Source: Reuters)
August 30: PCE Inflation Data Doesn’t Alter Fed’s Course for Rate Cuts
The personal consumption expenditures (PCE) price index rose by 0.2% in July, which was in line with expectations. This data confirms the expectation that the Federal Reserve will cut rates by at least 25 basis points in September. The figures suggest that inflation continues to decline without harming economic growth, reinforcing the outlook for a soft landing. The final size of the rate cut will depend on upcoming labor market data. The market continues to speculate about potential further rate cuts later this year. (Source: Reuters)
Conclusion
August 2024 was a month of remarkable financial and economic shifts, with global markets impacted by a series of events. The sharp drop in the Japanese stock market set the stage for concerns over a broader recession, while in the U.S., inflation data and Federal Reserve decisions offered hope for a more controlled economic trajectory. Simultaneously, developments in the cryptocurrency space set new legal precedents. The month concluded with positive signals for U.S. economic growth, supported by strong consumer spending. However, the outlook remains mixed, with uncertainty about further rate cuts and their impact on the labor market.
