Altcoins may be on track for a significant comeback in the second quarter of 2025, fueled by more favorable regulatory conditions, according to Swiss digital asset bank Sygnum.
In its latest Q2 2025 market outlook, Sygnum noted that the regulatory environment for cryptocurrencies has improved “dramatically,” laying the groundwork for a strong rally in the altcoin market. Despite these advancements, the bank emphasized that “none of the favorable changes have been reflected in current prices.”
Bitcoin recently reached its highest dominance level in four years, indicating that many investors have been reallocating their capital toward what’s seen as a more stable option.
Even so, Sygnum pointed to regulatory progress in the United States—such as former President Donald Trump’s proposed Digital Asset Stockpile and new moves toward stablecoin legislation—as potentially powerful drivers for broader crypto adoption.
“We believe that protocols with real user engagement will outperform, and Bitcoin’s dominance is likely to decrease,” the report stated.
Shift Toward Economic Value Spurs Innovation and Rivalry
The report also noted that competition among crypto projects is heating up, particularly as market participants focus more on real economic value. A competitive environment often leads to better offerings for end users:
“With a stronger emphasis on delivering economic value, protocols are now competing more aggressively for users and revenue. Projects like Toncoin, Sui, Aptos, Sonic, and Berachain are each taking unique routes,” the bank added.
While newer, high-performance blockchains aim to address limitations seen in networks like Bitcoin, Ethereum, and Solana, gaining traction and generating fee revenue remains a major hurdle.
Some strategies, however, are proving more promising. Berachain’s method of rewarding validators who provide liquidity to DeFi platforms, Sonic’s incentives for developers to build sticky user bases, and Toncoin’s integration with Telegram’s vast user base are among the more sustainable approaches identified in the report.
Beyond layer-1 chains, Sygnum also sees potential in layer-2 solutions. For example, Base made headlines during the recent memecoin boom, which temporarily pushed its user activity and revenue to new levels. However, those numbers dropped sharply as the hype faded.
Still, Sygnum highlighted that Base continues to lead among layer-2 networks in key metrics like daily transaction volume, throughput, and total value locked.
Memecoins Continue to Dominate Early 2025 Trends
Despite recent pullbacks in prices, memecoins held a strong position in Q1 2025’s crypto narrative. According to a report by CoinGecko, memecoins captured 27.1% of global investor interest in the first quarter—second only to AI-related tokens, which attracted 35.7%.
While retail traders seem enamored with memecoins, institutional investors are taking a different route. Bitwise Asset Management revealed on April 14 that at least 12 publicly listed companies added Bitcoin to their balance sheets for the first time in Q1 2025, pushing the total holdings of such firms to $57 billion.
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