Stacked Insights Newsletter, 12.14.21 BTC bounces as Fed m | Stacked

Stacked Insights Newsletter, 12.14.21

BTC bounces as Fed moves to end stimulus

The Fed concluded its monetary policy summit on a high as it decided to withdraw its remaining pandemic stimulus efforts quickly. Traditional and crypto markets responded happily to the news as both turned back up after days of indecision and downward pressure.

To combat soaring inflation, the Fed announced a plan to increase interest rates more than threefold in the next fiscal year. That’s not a bad thing for risk-on assets like crypto as it reins in a fast and loose monetary policy many felt was pushing the economy toward recession.

BTC closed the day at just over $49K to mark a significant turnaround after plummeting to lows around the decisive $46K inflection point. However, altcoins that lost in excess of 30% during the correction are the ones rallying back hardest.

STX, AVAX, EGLD, and FTM have all reclaimed nearly 20% in a display of strength that signals buyers are ready and waiting on the sidelines. Meanwhile, ETH, often viewed as the altcoin talisman, is back above $4K after limiting its losses compared with BTC and blue chips like BNB, SOL, and DOT.

The Avalanche effect

Lately, we’ve talked a lot about pullbacks because, well, that’s pretty much what the market keeps doing. But if you haven’t lost complete interest in checking the charts, you’ve surely noticed one token that doesn’t appear phased at all.

That token would be AVAX, the native asset belonging to the Avalanche platform. It seems like no matter how much everyone else dives, AVAX only dips at most before reclaiming its footing with greater surety than ever.

Why — what’s keeping it strong? Today, as the market showed signs of life, AVAX showed signs of vigor by catapulting +20% as if ready to tackle all-time highs again within days. The move was likely due in part to Bank of America’s declaration that Avalanche might be Ethereum’s first true competitor.

According to BoFa, it all boils down to subnets — the name for custom layer one blockchains anyone can create using Avalanche. Subnets allow the Avalanche network to scale up to 4,500+ transactions per second for near-instant finality. That use case in itself is fine and dandy, but the kicker comes with Avalanche’s increasingly killer network effects.

Just last month, global accounting firm Deloitte signed on to use Avalanche for a FEMA reimbursements service called Close As You Go. The program speeds disaster relief funds where they’re needed most — a fitting application for a fast blockchain.

It's possible we're only seeing the beginning of enterprises adopting blockchains. Given the buzz around Avalanche's speed and security, AVAX might find itself teleporting well into the crypto top 10 by market cap.