Sygnum Forecasts Potential Altcoin Rally in Q2 2025 Due to Improved Regulations

Sygnum predicts a potential rally for altcoins in Q2 2025 due to favourable regulatory changes. The report highlights Bitcoin’s dominance, increasing competition among protocols, and continued interest in memecoins despite recent declines. Institutional investment in Bitcoin is also rising, contrasting with retail interest in memecoins.

According to Swiss bank Sygnum, altcoins may experience a resurgence in Q2 2025 due to improved regulations surrounding digital assets. Their investment outlook notes that the regulatory environment has significantly advanced, establishing a foundation for a potential rally in the altcoin sector, even though these positive developments are yet to be reflected in the market prices.

In April 2025, Bitcoin’s dominance reached its highest level in four years, indicating a shift among crypto investors towards Bitcoin, regarded as a safer option. Sygnum posits that current regulatory initiatives in the US, including President Donald Trump’s creation of a Digital Asset Stockpile and stablecoin regulation progress, could further drive crypto adoption.

Sygnum suggests that as economic value becomes a greater focus, competition in the market will intensify. This competition promotes innovation and improved services for consumers, as various protocols such as Toncoin, Sui, Aptos, and Sonic employ diverse strategies to boost user engagement and revenue.

The firm emphasizes that while advanced blockchains are working to overcome the inherent limitations of Bitcoin, Ethereum, and Solana, gaining substantial user adoption and generating fee income remains a challenge. Examples of successful sustainability strategies are highlighted, such as Berachain incentivising liquidity from validators for DeFi apps and Sonic rewarding user-retaining developers.

Additionally, layer-2 networks like Base are mentioned as having significant prospects. Sygnum noted a remarkable spike in users and revenue during the memecoin trend, although both metrics sharply declined once memecoins fell out of favour. Nevertheless, Base retains its leadership among layer-2 solutions regarding daily transactions and total value locked.

Despite the recent downturn in memecoin prices, they persisted as a significant narrative in Q1 2025. A report from CoinGecko revealed that memecoins accounted for 27.1% of global investor interest, trailing only behind AI tokens at 35.7%. While retail investors lean towards memecoins, institutional investment patterns differ significantly, with asset manager Bitwise revealing that at least 12 public companies began acquiring Bitcoin for the first time in Q1 2025, boosting their collective holdings to $57 billion.