According to Sygnum's investment outlook for the third quarter of 2025, amid gradually clarifying regulations, increasing liquidity, and surging on-chain activity, the long-awaited altcoin rotation may be underway.
Despite earlier geopolitical tensions and U.S. fiscal instability leading to a sell-off in the altcoin market, changes in market dynamics 'may ignite the long-awaited altcoin season,' Sygnum stated in a report shared with Cointelegraph.
Sygnum mentioned that due to increased regulatory clarity, funds may shift towards projects with real economic use cases and sustainable token models, with some sectors already reflecting this shift.
The report indicates that Bitcoin's dominance has declined, recently dropping by more than 6% against the backdrop of capital flowing back into altcoins.
Related: The GENIUS Act will spark a new wave of payment services: Sygnum
Bitcoin hits all-time high due to supply crunch
The report indicates that due to supply and demand imbalance, the liquidity trend for Bitcoin is 'extremely bullish,' with BTC reaching an all-time high of over $123,000 on July 14.
Sygnum stated that the assets under management for Bitcoin ETFs have exceeded $160 billion, with more than 110,000 BTC held in a single quarter last quarter. Ethereum also experienced a decline in exchange balances, ETF inflows, and about 30% of its circulating supply being staked.
Ethereum has shifted to a better trend due to the successful Pectra upgrade, with the U.S. Securities and Exchange Commission clearly stating that staking does not fall under securities law.
Decentralized exchange market share reaches 30%
Decentralized exchanges reached record highs last quarter, accounting for 30% of all crypto spot trading. DeFi lending also reached a historic high of $70 billion, and Ethereum's liquid staking exceeded 30% of the supply. However, the bank warns that the current momentum in altcoins may trigger another memecoin bubble.
