Crypto News: Market update September 2024
September 2024 brought several crucial economic developments that could influence the future direction of the American economy and financial markets. The month began with disappointing job creation figures, indicating a mixed labor market situation, while unemployment only slightly decreased. The Federal Reserve responded with a significant interest rate cut aimed at countering a deterioration in economic conditions. Additionally, former Binance CEO Changpeng Zhao was released from prison after being detained for four months.
September 6: Job Creation Lags in August, Unemployment Decreases Slightly
In August, the U.S. added 142,000 jobs, fewer than the expected 161,000, although this was an increase from the 89,000 jobs in July. Unemployment decreased slightly to 4.2%, but the “real” unemployment rate, which includes discouraged workers and part-time workers, rose to 7.9%, the highest level since October 2021. Additionally, the job figures for June and July were significantly revised downward. The construction sector added the most jobs (34,000), while the manufacturing sector lost 24,000 jobs. Wages rose faster than expected, with a monthly increase of 0.4% and a yearly increase of 3.8%. Despite the mixed figures, it is expected that the Federal Reserve will soon lower interest rates to prevent further economic slowdown. (Source: CNBC)
September 11: Inflation in the U.S. Decreases, But Remains Stubborn in Certain Sectors
In August, consumer prices in the U.S. rose by 0.2%, bringing annual inflation to 2.5%, the lowest level since February 2021. Despite falling inflation, certain costs, such as housing and services, continue to rise. Core inflation, excluding food and energy, increased by 0.3% in August and 3.2% year-over-year. Although inflation is decreasing, there are still concerns about persistent price pressure, especially in the service sector. As a result, it is expected that the Federal Reserve will implement only a 0.25% interest rate cut next week, rather than 0.5%. (Source: Reuters)
September 18: FED Cuts Interest Rate by Half a Percentage Point: Aggressive Start of First Easing Campaign in Four Years.
The Federal Reserve has cut the interest rate by 0.5%, a notable move that marks the first reduction since the Covid pandemic. The cut brings the rate to a range of 4.75%-5%, aimed at supporting a cooling labor market and further reducing inflation. Inflation has decreased but remains above the desired 2%, while unemployment has slightly increased.
Fed Chair Jerome Powell emphasized that this significant interest rate cut is not the beginning of a series of aggressive actions. Although the market expected further rate reductions, Powell indicated that the Fed remains cautious about future moves, depending on economic developments. The labor market is showing signs of slowing, with a lower number of new jobs and rising unemployment.
The Fed lowered its inflation forecast for this year and anticipates a further rate reduction of about 2 percentage points over the coming years. Despite the economy still showing strong growth, with an expected GDP increase of 3%, the Fed remains focused on achieving price stability without significant increases in unemployment. This rate cut sets the tone for other central banks worldwide, which may follow suit.
Although the interest rate cut has been implemented, the Fed continues its program of “quantitative tightening,” gradually shrinking its balance sheet by not reinvesting maturing bonds. (Source: CNBC)
September 20: SEC Approves Options Trading for BlackRock’s Spot Bitcoin ETF
The U.S. Securities and Exchange Commission (SEC) has granted approval to Nasdaq to offer options for the iShares Bitcoin Trust (IBIT). This means that investors can now trade options on this Bitcoin exchange-traded fund (ETF). The options will be settled physically and will be subject to the same rules as other ETF options. Analysts expect that more approvals for spot Bitcoin ETF options will follow soon, although the final approval from other agencies still depends on additional authorizations. (Source: The Economic Times)
September 26: U.S. Economy Grows Stronger than Expected
The U.S. economy grew by 2.9% in 2023, an increase from the previous estimate of 2.5%. These revisions are due to improvements in business investment and consumer spending, despite the interest rate hikes by the Federal Reserve. Corporate profits were revised up by 8.9%, indicating stronger pricing power among companies. Gross Domestic Income (GDI) rose to 1.7%, and the savings rate was adjusted to 4.7%. These adjustments narrow the gap between GDP and GDI, both of which provide a better picture of economic health. (Source: Reuters)
September 27: Inflation in the U.S. Decreases to 2.2% in August, Lower than Expected
The Personal Consumption Expenditures (PCE) index rose by 0.1% in August, bringing annual inflation down to 2.2%, the lowest level since February 2021. This is a decrease from 2.5% in July. Core inflation, excluding food and energy, also increased by 0.1% and now stands at 2.7%. Despite a slight rise in housing costs, the inflation figures remain positive and support potential future interest rate cuts by the Federal Reserve. However, the growth of personal spending and income remained below expectations. (Source: CNBC)
September 27: Binance Founder Changpeng ‘CZ’ Zhao Released from Detention
Changpeng Zhao, the founder of cryptocurrency exchange Binance, was released from prison on September 27, earlier than scheduled, just two days before his official release. He was sentenced to four months in prison for failing to comply with the Bank Secrecy Act, along with an additional fine of $50 million. Zhao, who has a net worth of $25.3 billion, spent three months in a low-security prison before being transferred to a reintegration facility. The judge took into account his positive reputation and lack of a criminal record. (Source: CoinDesk)
Conclusion
September 2024 has shown that the U.S. economy is at a critical juncture, with various factors influencing one another. The combination of a weak labor market, declining inflation, and the interest rate cut by the Federal Reserve paints a complex yet intriguing picture. The approval of options for Bitcoin ETFs presents new opportunities for investors, while the strong economic growth in 2023 lays the groundwork for future recovery. It is clear that policymakers and investors must remain vigilant about developments in the labor market and inflation, as these are crucial for determining the direction of the economy and financial markets in the coming months.
