Altcoins might experience a revival in the second quarter of 2025 as regulations surrounding digital assets continue to enhance, according to Swiss financial institution Sygnum.
In its Q2 2025 investment forecast, Sygnum stated that the ecosystem has undergone “significantly improved” regulations for cryptocurrency applications, laying the groundwork for a robust alt-sector rally in the forthcoming quarter. Nonetheless, it emphasized that “none of the favorable developments have been reflected in the prices.”
In April, Bitcoin’s dominance reached its highest point in four years, indicating that cryptocurrency investors are reallocating their assets into what is perceived to be a relatively safer investment.
Nevertheless, Sygnum remarked that regulatory advancements in the United States, including President Donald Trump’s formation of a Digital Asset Stockpile and the progression of stablecoin regulations, may stimulate wider cryptocurrency adoption.
“We anticipate that protocols excelling in attracting users will outperform, causing Bitcoin’s dominance to diminish,” Sygnum articulated.
Heightened emphasis on economic value sparks competition
Sygnum also mentioned that competition is expected to intensify as the market emphasizes economic value. Greater competition in a market typically leads to enhanced products, ultimately serving the consumer’s benefit:
“The heightened focus on economic value within the market incites increased competition for user growth and revenue, with emerging protocols such as Toncoin, Sui, Aptos, Sonic, or Berachain adopting varying strategies.”
Sygnum added that while high-performance blockchains tackle the constraints of Bitcoin, Ethereum, and Solana blockchains, they find it difficult to achieve substantial adoption and fee income.
The report underscored that certain methods have proven to be more sustainable. These methods include Berachain’s strategy of incentivizing validators to supply liquidity to decentralized finance (DeFi) applications, Sonic’s rewarding of developers who attract and retain users, and Toncoin’s partnership with Telegram to reach 1 billion users.
In addition to layer-1 chains, Sygnum pointed out that layer-2 networks like Base also present potential. The report indicated that while the memecoin craze on the blockchain elevated its user base and revenue to unprecedented levels, it witnessed a correspondingly sharp downturn as memecoins began to wane.
Despite this decline, Sygnum remarked that Base continues to lead in layer-2 metrics such as daily transactions, throughput, and total value locked.
Related: Italy’s finance minister warns US stablecoins present a greater risk than tariffs
Memecoins remain a prominent crypto narrative in Q1
In spite of recent price drops, memecoins have stayed a prevailing crypto narrative in Q1 2025. A CoinGecko report recently emphasized that memecoins remained a dominant crypto narrative during the first quarter of 2025. The cryptocurrency data company noted that memecoins accounted for 27.1% of global investor interest, trailing only behind artificial intelligence tokens, which garnered 35.7%.
While retail investors continue to engage with memecoins, institutional entities are taking a different stance. Asset management firm Bitwise reported on April 14 that publicly traded companies are accumulating Bitcoin. At least 12 public firms acquired Bitcoin for the first time in Q1 2025, pushing the total Bitcoin holdings of public companies to $57 billion.
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