Altcoins Poised for 2025 Rally as Regulatory Improvements Boost Market

Swiss bank Sygnum has forecasted a potential resurgence for altcoins in the second quarter of 2025, driven by enhanced regulatory frameworks and growing user engagement. Despite Bitcoin's dominance reaching a four-year high in April, Sygnum's Q2 2025 investment outlook indicates that the digital asset space has witnessed substantial regulatory improvements, setting the stage for a robust altcoin rally.

The bank points to several factors contributing to this potential growth, including regulatory advancements in the US. The establishment of a Digital Asset Stockpile by President Donald Trump and progress in stablecoin regulations are expected to drive broader crypto adoption. Sygnum predicts that protocols successfully gaining user traction will outperform, leading to a decline in Bitcoin's dominance.

Increased competition within the market, fueled by a focus on economic value, is also anticipated to benefit consumers. Sygnum highlights that protocols such as Toncoin, Sui, Aptos, Sonic, and Berachain are adopting different strategies to attract users and generate revenue. For example, Berachain incentivizes validators to provide liquidity to decentralized finance (DeFi) applications, while Sonic rewards developers who attract and retain users. Toncoin, with its affiliation to Telegram, aims to access a user base of one billion.

Layer-2 networks, such as Base, are also identified as having potential. Although the memecoin frenzy on the blockchain led to a sharp decline in users and revenue, Base remains a leader in metrics like daily transactions, throughput, and total value locked.

Despite recent price declines, memecoins continued to dominate the crypto narrative in the first quarter of 2025. According to a report, memecoins accounted for 27.1% of global investor interest, second only to artificial intelligence tokens. However, institutions are taking a different approach, with publicly traded firms increasingly stacking up on Bitcoin. At least twelve public companies purchased Bitcoin for the first time in Q1 2025, pushing public firm holdings to $57 billion.