Altcoins May Rally in Q2 2025 Thanks to Improved Regulations: Sygnum

Altcoins Poised for Q2 2025 Rally Amid Regulatory Tailwinds, Says Sygnum

Altcoins could see renewed momentum in the second quarter of 2025 as the regulatory environment around digital assets significantly improves, according to Swiss digital asset bank Sygnum. In its Q2 2025 investment outlook, the bank highlighted that crypto regulations have become “drastically improved,” especially in major jurisdictions like the United States, laying the groundwork for an altcoin resurgence.

Despite Bitcoin dominance reaching a four-year high in April—suggesting that investors are currently favoring what’s seen as a safer asset—Sygnum believes this trend may soon reverse. According to the bank, many of the recent positive developments around crypto adoption and regulation have yet to be priced into the market.

Regulatory Progress Could Shift Market Momentum

Sygnum pointed to significant regulatory milestones in the U.S., such as the advancement of stablecoin legislation and the creation of a "Digital Asset Stockpile" initiative under President Donald Trump. These steps, the bank says, are instrumental in driving institutional confidence and expanding crypto's user base.

“We expect protocols successful in gaining user traction to outperform and Bitcoin’s dominance to decline,” the report stated.

Competition Drives Innovation in Layer-1s

With a sharpened focus on economic value, competition among blockchain protocols is intensifying. Sygnum believes this competition is healthy for the industry, leading to better products and user experiences.

Emerging layer-1 chains like Toncoin, Sui, Aptos, Sonic, and Berachain are differentiating themselves by tackling some of the inefficiencies of more established networks like Bitcoin, Ethereum, and Solana. However, Sygnum acknowledged that these high-performance blockchains still face challenges in scaling adoption and generating sustainable fee income.

Some projects have adopted novel models to foster growth:

• Berachain incentivizes validators to provide liquidity for DeFi protocols.

• Sonic rewards developers who can drive and maintain user engagement.

• Toncoin leverages its affiliation with Telegram, granting access to a vast base of over 1 billion users.

Layer-2 Networks and the Base Boom

Sygnum also highlighted the continued relevance of layer-2 networks, naming Base as a standout performer. The memecoin trading frenzy earlier this year significantly boosted Base’s activity, resulting in record highs in user numbers and revenues. Although interest in memecoins has since cooled, Base continues to lead in core metrics like daily transactions, throughput, and total value locked (TVL).

Memecoins Hold Retail Spotlight, Institutions Focus on Bitcoin

Memecoins remained a major force in Q1 2025, capturing 27.1% of global investor interest—second only to AI-related tokens, according to a recent CoinGecko report. While retail enthusiasm for memecoins persists, institutional investors are doubling down on Bitcoin.

Asset manager Bitwise revealed that 12 publicly traded firms added Bitcoin to their balance sheets for the first time in Q1, driving total public company holdings to $57 billion.

Conclusion

While Bitcoin continues to dominate, Sygnum’s analysis suggests that altcoins may be gearing up for a breakout quarter. With regulatory clarity improving and competition pushing projects to innovate, investors may soon shift focus toward undervalued altcoin opportunities—especially those gaining real-world traction and delivering economic value.