Markets reels after Fed says economy is 'in solid position'
Bitcoin has been trading at $96,532.37 after The Federal Reserve decided to hold rates unchanged at 4.25% to 4.50% for the current policy statement.
Crypto markets held steady Wednesday after the Federal Reserve left interest rates unchanged and made a surprise decision to halt the reduction of its balance sheet, a shift seen as slightly more accommodative in tone.
The decision came after Chairman Jerome Powell reiterated consistent communication, emphasizing that the Fed retains a data-dependent approach in the face of continuing inflation and a labor market that is moderating but remains strong.
'The Committee is strongly committed to supporting maximum employment and returning inflation to its 2 percent objective,' the Fed said in its post-meeting statement. Powell also added that the U.S. economy "is in a solid position".
It also recognized additional "uncertainty around the economic outlook' has increased, likely due to U.S. tariff escalation with China.
Minutes before the Fed's decision hit the market, Trump stated he wouldn't roll back the 145% tariffs on Chinese goods, raising significant apprehension among global markets.
While the Fed certainly didn't execute the rate cut that the President wanted, it did surprise markets by saying it would halt the pace of its program to reduce the balance sheet. The Fed will slow down the process of pulling money out of the economy, which will benefit markets like crypto assets.
What the Fed will do next will depend quite a bit on inflation data and upcoming soft data related to the job market, which will help decide if rate cuts happen later this year — potentially a significant catalyst for momentum in digital assets.
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Bitcoin is introduced into Africa's largest slum, with risks and rewards
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With bitcoin, "they do not need documentation to have a bank account … that gives them the foundation for financial freedom.' Bitcoin, the first and largest crypto, was created in 2009 in the wake of the global financial crisis as a decentralized digital asset that could act as an alternative method of payment. The asset has found more popular use as a store of value, like a digital form of gold. Bitcoin has attracted enthusiastic supporters as prices have climbed almost 1,000% in the last five years. But its volatility and lack of regulation are concerns. AfriBit Africa introduced bitcoin into Soweto West in early 2022 through crypto-denominated grants to local garbage collectors, who are often funded by nonprofits. The groups are made up of dozens of young people, who Mdawida says are more likely to be open to new tech. After gathering on a Sunday to collect trash, garbage collectors are paid a few dollars' worth of bitcoin. AfriBit Africa estimates that it has put some $10,000 into the community, with garbage collectors acting as the main agents of spreading bitcoin in Soweto West. In Kibera, many people earn about a dollar a day. Now a small number of other residents hold bitcoin, and some merchants and motorcycle taxis accept payments in crypto. Damiano Magak, 23, a garbage collector and food seller, said he prefers bitcoin to M-PESA, the ubiquitous mobile money platform in Kenya, because M-PESA transaction costs are higher and the network can be slower. There are no fees for M-PESA transactions between individuals or businesses up to 100 Kenyan shillings (78 cents), but after that the fees increase with transaction size. Fees for the Lightning bitcoin network where transactions take place are free if people use a platform that AfriBit Africa introduced into the community. Onesmus Many, 30, another garbage collector, said he feels safer with his money in a bitcoin wallet instead of in cash because of crime. Some merchants have found benefits to accepting crypto, including Dotea Anyim. She said around 10% of customers at her vegetable stand pay in bitcoin. 'I like it because it is cheap and fast and doesn't have any transaction costs,' she says. 'When people pay using bitcoin, I save that money and use cash to restock vegetables.' The possibility that crypto prices could keep rising also appeals to residents of Soweto West. Magak and Many said they now have around 70% to 80% of their net worth in bitcoin, a far higher level of exposure than most people. 'It is my worth and I'm risking it in bitcoin,' Magak said. That concerns Ali Hussein Kassim, a fintech entrepreneur and chair of the FinTech Alliance in Kenya. 'In an extremely volatile asset like bitcoin, it's overexposure. I can't afford to lose 80% of my wealth. How about a guy in Kibera?' Kassim said. 'You are exposing a vulnerable community to an ecosystem and to financial services that they can't necessarily afford to play in.' Kassim acknowledged the potential benefits that digital assets could bring, particularly in facilitating cheaper cross-border payments like remittances, but failed to see the benefit in Kibera. Bitcoin's volatility could negate the benefits of cheaper transaction fees, Kassim said, and bitcoin does not have the same protections as other financial services due to a lack of regulation. Mdawida disagreed, calling bitcoin's unregulated nature a benefit. 'We don't shy away from the risks involved,' the AfriBit Africa co-founder said, noting the group's investments in bitcoin education in Kibera, including financial literacy training and crypto courses in the community. Efforts to introduce bitcoin into developing countries have faced challenges. Bitcoin was adopted as legal tender in El Salvador and Central African Republic but both countries have reversed their decision. In Kenya, the digital asset sector has faced legal and regulatory challenges, including crackdowns on cryptocurrency giveaways. This small project, focusing only on Soweto West, has been allowed. 'On my phone I put notifications on when bitcoin rises … and it's all smiles," Magak said. "Whenever it fluctuates up and down, I know at the end of the day it will just rise.' ___ For more on Africa and development: The Associated Press receives financial support for global health and development coverage in Africa from the Gates Foundation. The AP is solely responsible for all content. Find AP's standards for working with philanthropies, a list of supporters and funded coverage areas at Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
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31 minutes ago
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Citigroup drops July rate cut bets for US, trims forecast to 75 bps
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34 minutes ago
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China says its exports to the US fell nearly 10% in May, as trade talks are due to start in London
China's exports to the United States sank fell nearly 10% in May from a year earlier, new customs data show, adding to pressure on the world's second largest economy as a new round of trade talks with Washington was due to start later Monday in London. China's total exports rose 4.8% last month, slowing from an 8.1% year-on-year increase in April. Imports declined 3.4% year-on-year, leaving a trade surplus of $103.2 billion. China exported $28.8 billion to the United States in May, while its imports from the U.S. fell 7.4% to $10.8 billion, the report said. Still, exports to Southeast Asia and the European Union remained robust, growing 14.8% and 12%, year-on-year. Exports to Thailand, Vietnam and Indonesia were sharply higher, and exports to Germany jumped more than 12%. 'The acceleration of exports to other economies has helped China's exports to remain relatively buoyant in the face of the trade war,' Lynne Song of ING Economics said in a commentary. Many businesses had rushed orders earlier in the year to try to beat higher tariffs. Once new import duties took effect, shipments slowed. Exports will likely rebound somewhat in June thanks to a 90-day suspension of most of the tariffs China and the U.S. imposed on each other in their escalating trade war, Zichun Huang of Capital Economics said in a report. 'But with tariffs likely to remain elevated and Chinese manufacturers facing broader constraints on their ability to sustain rapid gains in global market share, we think export growth will slow further by year-end,' Huang said. Despite the tariffs truce, rancor between Beijing and Washington has persisted, with angry exchanges over advanced semiconductors, 'rare earths' that are vital to many industries and visas for Chinese students at American universities. The round of negotiations due to take place later Monday in London follow a phone call last week between Trump and Chinese leader Xi Jinping. It's unclear if that exchange will lead to any significant progress during the talks this week. Speaking to reporters on Air Force One on Friday, Trump said Xi had agreed to restart exports of rare earth minerals and magnets to the U.S. which China had slowed, threatening a range of U.S. manufacturers that relied on the critical materials. There was no immediate confirmation from China. The trade data released on Monday showed a nearly 21% plunge in the value of China's rare earths exports in January to May compared with a year earlier. In terms of volume, those exports rose 2.3%. Similar trends can be seen in exports of other products and commodities, such as shoes, ceramics and cell phones, as slowing demand causes prices to fall. Other data released Monday highlighted the pressure on China's own economy from slowing exports. Imports have faltered since manufacturers import many of the components and materials needed for the goods they assemble for the world. At the same time, China's own domestic markets are suffering. The government reported that consumer prices fell 0.1% in May, evidence of sluggish demand. The persisting deflation partly reflects lower food prices, economists said.
