ARBUSD Arbitrum

The crypto ecosystem is on the cusp of yet another significant week, ushered in by several major developments taking place across different networks. This week’s spotlight falls on Bitcoin, Fantom, Avalanche, Stacks, and LayerZero, each of which is facing a pivotal milestone. The broader macro backdrop is also critical, particularly the December 18 Federal Open Market Committee (FOMC) interest-rate decision in the United States. #1 Bitcoin And Crypto Await The FOMC Decision Bitcoin traders and investors are watching the Federal Reserve’s policy meeting scheduled for Wednesday, December 18, at 2:00 pm ET, with Fed Chair Jerome Powell’s press conference to follow at 2:30 pm ET. Saxo Bank writes in their latest investor note, “The Federal Reserve is widely expected to deliver a 25 basis-points (bps) rate cut this week, reducing the target range for the federal funds rate to 4.25-4.50%.” According to futures data, there is a 95% probability of this move, which follows a similar cut in November. While the rate cut is seemingly priced in, the market will scrutinize the Fed’s Summary of Economic Projections (SEP) and its “dot plot,” which depict the expected path of policy rates for 2025 and beyond. Any signal that the Federal Reserve could limit the pace of future cuts—particularly if it revises the dot plot from four rate cuts in 2025 down to three or even two—might weigh on risk-on assets such as Bitcoin and cryptocurrencies. Many analysts point to the labor market, which has been softening, and to easing shelter inflation, evidenced by slowing rental price growth, as key justifications for additional rate cuts. Related Reading: Crypto Market Hit Hard With $1.7 Billion Liquidated, Largest Event Since 2021 However, the Fed may convey a more cautious stance and highlight so-called “Trump-flation” risks, referencing the possibility of renewed trade tariffs under the incoming Trump administration that could push inflation higher. If such inflationary risks remain persistent, the Fed might pause or reduce the pace of cuts in 2025, which would be viewed as a hawkish twist. The new dot plot for 2025 is currently expected to show around 3.625%—a baseline assumption of three rate cuts next year—but the market has speculated that this could move to 3.875% if the Fed becomes more cautious. The immediate reaction in Bitcoin will likely hinge on the meeting’s tone, with a less dovish Fed potentially introducing volatility to BTC price action. #2 Fantom (FTM) Fantom is entering a new era with the upcoming Sonic L1 mainnet launch, a transformative upgrade that will dramatically improve network throughput and cost efficiency. Developers behind Fantom have highlighted that Sonic is capable of processing approximately 10,000 transactions per second, with near-instant finality—a marked leap from current network capabilities. The planned modifications are also set to cut operational expenditures, with a reported 66% decrease in validator node costs and minimized storage requirements. Another important detail is Fantom’s decision to maintain compatibility with the Ethereum Virtual Machine, which should make it straightforward for EVM-based applications to migrate to the upgraded chain without modifying their underlying code. Sonic will also debut a new token, denoted as S, which will replace the existing FTM token at a one-to-one ratio. The crypto trader Jacob Canfield stated via X, “Shared this setup x subs last week, but FTM is close to a price discovery break. Needs to clear the bearish impulse base and close a 4 hour candle and we will probably see swift price discovery. The chart coincides nicely with the SONIC launch.” #3 Avalanche (AVAX) Avalanche will be another focal point in the crypto industry, as the Avalanche9000 upgrade is set to go live on the mainnet today, on December 16. This follows a testnet debut on the “Fuji” testnet on November 25. Related Reading: Crypto Market Outlook: VanEck Issues 10 Predictions, Including Bitcoin Nearing $200,000 The highly anticipated mainnet launch is described by Avalanche’s core developers as the most significant upgrade in the chain’s history. Compounding the buzz is Avalanche’s December 12 announcement of a $250 million private token sale led by Galaxy Digital, Dragonfly, and ParaFi Capital, with more than 40 other entities participating. According to official statements, this fundraising round strengthens Avalanche’s treasury, already valued at around $3 billion in AVAX tokens, and comes on the back of a previous $230 million token sale in 2021. Avalanche9000 incorporates the Etna Upgrade and key community proposals ACP-77 and ACP-125, altogether reimagining how Avalanche’s subnets function—now referred to as layer-1s. In doing so, Avalanche transitions from a costly validator system requiring 2,000 AVAX per instance to a more subscription-like model that charges 1.33 AVAX per month. The upgrade also focuses on cross-chain connectivity, enabling more sophisticated interchain communication within Avalanche’s broader ecosystem. #4 Stacks (STX) Stacks is another name to keep on the radar as it prepares to launch sBTC on Tuesday, December 17, at 11:00 am ET. This new BTC-backed asset is designed to bring Bitcoin’s liquidity directly into the DeFi sphere on Stacks, offering a rewards program that is notably free of staking requirements. According to the project’s official announcement, the sBTC Rewards Program provides a 5% annual Bitcoin reward, paid out in bi-weekly installments, and the distribution is made in actual Bitcoin, not third-party tokens. The program’s first phase, commencing on December 17, will focus on deposit functionality and immediate rewards accrual for sBTC holders. The second phase, currently planned for March 2025, is expected to layer in more advanced DeFi capabilities and reward structures, thereby broadening the utility of sBTC. #5 LayerZero (ZRO) LayerZero rounds out the week’s watchlist with a governance milestone. On December 20, 2024, at 00:00 UTC, ZRO token holders will engage in the network’s first-ever fee switch referendum, a vote that could activate a protocol fee on every LayerZero message. The referendum is straightforward, posing the single question, “Turn the fee switch on?” A majority vote of “Yes,” assuming quorum is met, would enact a fee that matches the underlying DVN and Executor costs for each message, effectively doubling the cost of each cross-chain transmission. The collected fees would then be used to buy back and burn ZRO, potentially reducing the circulating supply and impacting the token’s economics. ZRO balances across Ethereum, Optimism, Base, Polygon, Avalanche, BNB Chain, and Arbitrum are all factored into each holder’s voting power, consolidated seamlessly through LayerZero’s lzRead feature. The referendum will last seven days, concluding on December 27, 2024. A 60% quorum of the circulating supply is required for the vote to be valid; if that threshold is not met, the outcome defaults to “No.” If the referendum passes, the protocol fee would be immediately activated, potentially shifting the dynamics of how developers and users manage cross-chain communications. This governance mechanism is set to repeat every six months, though the quorum requirement would decrease by 5% each time if it is not met, down to a minimum floor of 20%. At press time, Bitcoin traded at $104,748. Featured image created with DALL.E, chart from TradingView.com