Bitcoin News Today: Regulatory Clarity, Surging Liquidity Fuel Altcoin Demand Amid 6% Drop in Bitcoin Dominance

A potential resurgence in altcoin demand is gaining momentum as favorable regulatory developments, enhanced liquidity, and rising onchain activity align to create conditions for an "altseason," according to Sygnum’s Q3 2025 Investment Outlook. The digital bank highlighted that capital is increasingly flowing toward altcoins with tangible economic use cases and sustainable token models, signaling a structural shift in the crypto market [1].

The report notes that Bitcoin’s dominance, which peaked at a five-year high amid geopolitical tensions earlier this year, has declined by over 6% as investors reallocate funds to alternative cryptocurrencies. This trend coincides with regulatory clarity extending to altcoins, particularly in the U.S., where the Securities and Exchange Commission clarified that protocol staking does not fall under securities law. This development has further bolstered market confidence [1]. Ethereum, for instance, has seen a surge in institutional interest, with projects like Sharplink planning a $1 billion ETH allocation and major financial institutions launching tokenization initiatives on its network [1].

Liquidity trends for Bitcoin remain robust, with spot ETFs exceeding $160 billion in assets under management and accumulating over 110,000 BTC in the previous quarter alone. The asset also reached an all-time high of $123,000 on July 14, driven by persistent supply constraints. Meanwhile, Ethereum’s post-Pectra upgrade performance has been marked by declining exchange balances and a 30% staking rate, reflecting strong demand from both retail and institutional participants [1].

Decentralized exchanges (DEXs) captured 30% of total crypto spot trading in Q2 2025, a record high fueled by memecoin launches that pushed quarterly volumes to $530 billion. Platforms like PancakeSwap on BNB Chain and Solana’s PumpSwap led this growth, outpacing traditional centralized exchanges. DeFi lending also hit a $70 billion all-time high in locked value, with Ethereum’s lending activity surging as investors seek leveraged exposure [1].

However, Sygnum cautioned that unchecked momentum in altcoins could trigger another memecoin-driven market bubble, reminiscent of past speculative frenzies. Historical patterns suggest such bubbles often culminate in sharp corrections if left unregulated. The report emphasized the need for balanced risk management, particularly as liquid staking approaches 30% of Ether’s supply and leveraged positions expand [1].

The analysis draws from Sygnum’s comprehensive market assessment, integrating onchain metrics, regulatory updates, and institutional adoption trends. While the outlook remains optimistic for altcoins with real-world utility, the report underscores the importance of navigating evolving market dynamics with caution [1].

Source: [1] Altseason on horizon amid liquidity surge, regulatory clarity (https://coinmarketcap.com/community/articles/6889e02854b60d73c6013dda/)