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The cryptocurrency ecosystem is about to enter another significant week, ushered in by several major developments happening across various networks. This week’s spotlight is on Bitcoin, Fantom, Avalanche, Stacks, and LayerZero, each of which are facing significant milestones. The broader macro context, particularly the US Federal Open Market Committee (FOMC) interest rate decision of December 18, is also important.
#1 Bitcoin and cryptocurrencies await FOMC decision
Bitcoin traders and investors are keeping an eye on the Federal Reserve’s policy meeting scheduled for Wednesday, December 18th at 2pm ET, followed by Chairman Jerome Powell’s press conference. It is scheduled for 2:30 p.m. “The Federal Reserve is widely expected to cut interest rates by 25 basis points (bps) this week, lowering the target range for the federal funds rate to 4.25% to 4.50%,” Saxo Bank said in its latest investor note. “There is,” he wrote.
Futures data puts the probability of this move at 95%, following a similar rate cut in November. While a rate cut appears to be priced in, markets will be scrutinizing the Fed’s Summary Economic Projections (SEP) and the dot plot that depicts the expected path of policy rates from 2025 onwards.
If there are any signals that the Fed may limit the pace of future rate cuts, especially if it corrects the dot plot from 4 rate cuts to 3 or even 2 in 2025, Bitcoin, cryptocurrencies, etc. This could weigh on risk-on assets. Many analysts cite a softening labor market and easing haven inflation, as evidenced by slower rental price growth, as the main reasons to justify further rate cuts.
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However, the Fed is likely to signal a more cautious stance, highlighting the risk of so-called “Trump inflation,” citing the possibility of new trade tariffs under the incoming Trump administration that could push up inflation. There is. If these inflation risks persist, the Fed could pause or reduce rate cuts in 2025, but this would be seen as a hawkish twist.
The new dot plot for 2025 is currently expected to show around 3.625%, the baseline assumption for three rate cuts next year, but markets believe this could rise to 3.875% if the Fed becomes more cautious. It is assumed that there is. Bitcoin’s immediate reaction is likely to depend on the tone of the meeting, and a less dovish Fed could introduce volatility to BTC price action.
#2 Phantom (FTM)
Fantom is entering a new era with the upcoming release of Sonic L1 mainnet, a revolutionary upgrade that dramatically increases network throughput and cost efficiency. Fantom’s developers highlighted that Sonic can process approximately 10,000 transactions per second with near-instantaneous finality. This is a significant leap from current network capabilities.
The planned changes are also aimed at reducing operational costs, with a reported 66% reduction in validation node costs and minimal storage requirements. Another important detail is Fantom’s decision to remain compatible with the Ethereum virtual machine. This allows EVM-based applications to easily migrate to the upgraded chain without changing the underlying code.
Sonic will also debut a new token, denoted by an S. This will replace existing FTM tokens on a 1:1 ratio.
Cryptocurrency trader Jacob Canfield wrote via We need to close the bar and we’ll probably see some quick price discovery. This chart aligns nicely with the SONIC launch.”
#3 Avalanche (AVAX)
Avalanche will become another focal point in the cryptocurrency industry as the Avalanche9000 upgrade is scheduled to go live on mainnet today, December 16th. This follows its testnet debut on the “Fuji” testnet on November 25th.
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The long-awaited mainnet launch has been described by Avalanche’s core developers as the most significant upgrade in the chain’s history. Adding to the buzz, Avalanche announced on December 12th a $250 million private token sale led by Galaxy Digital, Dragonfly, and ParaFi Capital, with participation from over 40 other companies. That’s true.
According to an official statement, this funding round strengthens Avalanche’s financials, which is already valued at around $3 billion in AVAX tokens, and comes on the back of a previous $230 million token sale in 2021. be exposed.
Avalanche9000 incorporates Etna upgrades and key community suggestions ACP-77 and ACP-125, completely rethinking how subnets (now called Layer 1) work in Avalanche. Masu. This moves Avalanche from an expensive validator system that requires 2,000 AVAX per instance to a more subscription-like model that charges 1.33 AVAX per month. This upgrade also focuses on cross-chain connectivity, enabling more advanced inter-chain communications within Avalanche’s broader ecosystem.
#4 Stack (STX)
Stax is another name to keep an eye on as it prepares to launch sBTC on Tuesday, December 17th at 11am ET. This new BTC-backed asset is designed to bring Bitcoin liquidity directly to the DeFi space on the stack, and specifically offers a rewards program with no staking requirements.
According to the project’s official announcement, the sBTC rewards program will offer 5% annual Bitcoin rewards in biweekly installments, with distributions made in real Bitcoin rather than third-party tokens.
The first phase of the program, which begins on December 17th, will focus on deposit functionality and instant reward generation for sBTC holders. The second phase, currently planned for March 2025, is expected to add more advanced DeFi features and reward structures, thereby expanding the utility of sBTC.
#5 Layer Zero (ZRO)
LayerZero concludes this week’s watchlist with a governance milestone. At 00:00 UTC on December 20, 2024, ZRO token holders will participate in the first fee switching referendum in the network’s history. This is a vote that could potentially enable protocol fees for all LayerZero messages.
The referendum is straightforward and asks just one question: “Do you want to flip the switch on fees?” Assuming quorum is met, a majority vote “yes” enacts a fee that matches the underlying DVN and Executor cost of each message, effectively doubling the cost of each cross-chain send. Masu.
The fees collected will be used to buy back and burn ZRO, reducing the circulating supply and potentially impacting the economics of the token. ZRO balances across Ethereum, Optimism, Base, Polygon, Avalanche, BNB Chain, and Arbitrum are all incorporated into each holder’s voting rights and seamlessly integrated through LayerZero’s lzRead functionality.
The referendum will last seven days and end on December 27, 2024. A quorum of 60% of the circulating supply is required for a vote to be valid. If that threshold is not met, the result defaults to ‘No’. If the referendum passes, protocol fees could be immediately triggered, changing the dynamics of how developers and users manage cross-chain communications.
This governance mechanism is set to repeat every six months, each time decreasing by 5% to a minimum floor of 20% if the quorum requirements are not met.
At the time of writing, Bitcoin was trading at $104,748.
Featured image created with DALL.E, chart on TradingView.com
