The cryptocurrency landscape is on the brink of another transformative week, marked by several critical developments across various networks. This period of innovation sees Bitcoin, Fantom, Avalanche, Stacks, and LayerZero each facing significant milestones. Additionally, the broader macroeconomic environment plays a vital role, especially concerning the upcoming Federal Open Market Committee (FOMC) interest rate decision in the United States, scheduled for December 18.
Bitcoin and Crypto Await the FOMC Decision
Bitcoin traders and investors are closely monitoring the Federal Reserve’s policy meeting on Wednesday, December 18, at 2:00 pm ET, with a subsequent press conference by Fed Chair Jerome Powell at 2:30 pm ET. According to Saxo Bank’s latest investor note, there is a widespread expectation for the Federal Reserve to implement a 25 basis-points (bps) rate cut, adjusting the target range for the federal funds rate to 4.25-4.50%.
Futures data suggests a 95% likelihood of this rate cut, following a similar reduction in November. While this move appears to be priced in, market participants will be keenly analyzing the Fed’s Summary of Economic Projections (SEP) and its “dot plot,” which outlines the anticipated trajectory of policy rates for 2025 and beyond.
A shift indicating that the Federal Reserve may curb the pace of future cuts—particularly if it alters the dot plot from four rate cuts in 2025 down to three or even two—could potentially impact risk-on assets like Bitcoin and other cryptocurrencies. Analysts highlight the softening labor market and the easing of shelter inflation, as evidenced by slowing rental price growth, as key factors justifying further rate cuts.
Economic Projections and Market Reactions
However, the Federal Reserve might adopt a more cautious position, highlighting “Trump-flation” risks, which refer to the potential resurgence of trade tariffs under the incoming Trump administration that could drive inflation higher. If these inflationary threats persist, the Fed may pause or slow down the rate of cuts in 2025, presenting a more hawkish outlook.
The new dot plot for 2025 is anticipated to show around 3.625%—a baseline assumption of three rate cuts next year. However, the market speculates this could increase to 3.875% if the Fed becomes more cautious. Bitcoin’s immediate reaction will likely depend on the tone of the meeting, with a less dovish Fed potentially introducing volatility to BTC price action.
Fantom (FTM) and the Sonic L1 Mainnet Launch
Fantom is poised for a new chapter with the Sonic L1 mainnet launch, a transformative upgrade set to significantly enhance network throughput and cost efficiency. Developers have emphasized that Sonic can process approximately 10,000 transactions per second with near-instant finality, a substantial improvement over current capabilities.
This upgrade is also expected to reduce operational costs, with a reported 66% decrease in validator node expenses and minimized storage requirements. Notably, Fantom has decided to maintain compatibility with the Ethereum Virtual Machine, simplifying the migration process for EVM-based applications to the upgraded chain without requiring modifications to their underlying code.
Sonic will also introduce a new token, denoted as S, which will replace the existing FTM token at a one-to-one ratio. Crypto trader Jacob Canfield remarked, “Shared this setup with subscribers last week; FTM is nearing a price discovery breakthrough. Clearing the bearish impulse base and closing a 4-hour candle could lead to swift price discovery, coinciding with the SONIC launch.”
Avalanche (AVAX) and the Avalanche9000 Upgrade
Avalanche is another focal point in the crypto industry, with the Avalanche9000 upgrade set to launch on the mainnet today, December 16, following its initial debut on the “Fuji” testnet on November 25. According to core developers, this is the most significant upgrade in Avalanche’s history.
The buzz surrounding this upgrade is compounded by Avalanche’s recent announcement of a $250 million private token sale led by Galaxy Digital, Dragonfly, and ParaFi Capital, with over 40 other entities participating. This fundraising effort bolsters Avalanche’s treasury, valued at around $3 billion in AVAX tokens, and follows a previous $230 million token sale in 2021.
Avalanche9000 incorporates the Etna Upgrade and key community proposals ACP-77 and ACP-125, fundamentally reimagining how Avalanche’s subnets operate, now referred to as layer-1s. This transition moves away from a costly validator system requiring 2,000 AVAX per instance to a subscription-like model charging 1.33 AVAX per month. The upgrade also emphasizes cross-chain connectivity, facilitating more sophisticated interchain communication within Avalanche’s ecosystem.
Stacks (STX) and the Introduction of sBTC
Stacks is another project to watch as it prepares to launch sBTC on Tuesday, December 17, at 11:00 am ET. This new BTC-backed asset aims to bring Bitcoin’s liquidity directly into the DeFi space on Stacks, offering a rewards program free of staking requirements.
According to the project’s official announcement, the sBTC Rewards Program provides a 5% annual Bitcoin reward, paid out bi-weekly, with distributions made in actual Bitcoin, not third-party tokens. The first phase, starting December 17, will focus on deposit functionality and immediate rewards accrual for sBTC holders. The second phase, planned for March 2025, is expected to introduce more advanced DeFi capabilities and reward structures, thereby expanding sBTC’s utility.
LayerZero (ZRO) and Governance Milestones
LayerZero concludes this week’s watchlist with a significant governance milestone. On December 20, 2024, at 00:00 UTC, ZRO token holders will participate in the network’s first-ever fee switch referendum, a vote that could introduce a protocol fee on every LayerZero message.
The referendum is straightforward, asking, “Turn the fee switch on?” A majority “Yes” vote, assuming quorum is met, would implement a fee matching 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 considered in each holder’s voting power, seamlessly consolidated through LayerZero’s lzRead feature. The referendum will last seven days, concluding on December 27, 2024, with a 60% quorum of the circulating supply required for the vote to be valid. If the threshold is not met, the outcome defaults to “No.” A successful referendum would activate the protocol fee immediately, potentially altering how developers and users manage cross-chain communications.
This governance mechanism is set to repeat every six months, with the quorum requirement decreasing by 5% each time if not met, down to a minimum floor of 20%.
As of the latest update, Bitcoin is trading at $104,748.
