Altcoin Rotation ‘Altseason’ May Be On Track, Sygnum Signals

Improved regulatory clarity, rising liquidity, and heightened on-chain activity suggest an anticipated rotation into alternative cryptocurrencies, according to Sygnum’s Q3 2025 Investment Outlook. This potential shift may finally ignite the long-awaited ‘altseason’, the digital bank stated.

Geopolitical instability and US fiscal anxieties earlier this year triggered a broader sell-off across the altcoin market. However, Sygnum reported that evolving market dynamics could reignite this sought-after market phase.

The report highlights that as regulations increasingly apply to altcoins, capital may migrate towards projects boasting genuine economic utility and sustainable token models. The bank implied this transition might already be unfolding, citing observable strength in specific sectors.

Furthermore, Sygnum observed a decline in Bitcoin dominance, which previously peaked at its highest annual level since 2021 during periods of macroeconomic pressure. This recent drop, recorded over 6%, indicates a renewed movement of capital towards alternative assets.

Bitcoin Dominance Chart — *Bullish liquidity trends for BTC, a persistent supply-demand imbalance, and $123,000 being reached recently have sustained its dominance, which remains above 53%. Source: TradingView*

Bitcoin Reaches New All-Time High Amid Supply Squeeze

Notwithstanding the altcoin hype, Sygnum reported “extremely bullish” liquidity trends for Bitcoin. The largest cryptocurrency, by market value, surged past $123,000 on July 14th, securing a new all-time high (ATH).

The bank stated that Bitcoin Spot ETFs have surpassed $160 billion in assets under management, netting approximately 110,000 BTC during the previous quarter alone. Ethereum (ETH) followed suit, demonstrating declining exchange balances, consistent ETF inflows, and nearly 30% of its liquid supply engaged in staking.

ETH ETF Flows — *ETH ETF inflows continue. Source: SoSoValue*

The recent Pectra upgrade bolstered the Ethereum narrative by raising the staking limit and introducing various technical enhancements. Sygnum noted that regulatory validation from the US SEC, classifying protocol staking as non-securities activity, cemented this positive momentum.

Confirming ETH’s bullish trajectory, Sygnum cited a “conclusive” breakout above long-term downtrends. Key players like Sharplink are reportedly planning significant ETH allocations, while Wall Street institutions build upon Ethereum for innovations like stablecoins. The report highlighted active projects including a USD1 stablecoin backed by Trump administration ties.

Last quarter witnessed decentralized exchanges achieve a record 30% share of total crypto spot trading volume. This surge was propelled by widespread memecoin launches inflating DEX trading activity to $530 billion.

According to Sygnum, PancakeSwap led the charge on the BNB Smart Chain, while Solana’s PumpSwap subsequently overtook established exchange Raydium in transaction volume.

DeFi lending protocols also reached an all-time high of $70 billion total locked value (TVL). Liquid staking deposits surpassed 30% of the ETH supply, demonstrating strong institutional integration into the DeFi ecosystem. “Active loans surged to ATHs,” Sygnum commented, “as risk appetite grows during market rallies.”

The current altcoin rally could potentially foster another memecoin bubble, a historical pattern carrying significant risk of a sharp correction if unchecked, warned Sygnum.

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Disclaimer: This is an AI-assisted rewrite. Market conditions change rapidly. Readers should conduct their own research before making investment decisions.