Sygnum: Altcoin may be bullish in Q2 due to improved regulations

According to Swiss bank Sygnum, altcoin could revive in Q2 2025 as regulations on digital assets continue to improve.

In the Q2 2025 investment outlook report, Sygnum stated that regulations for the use cases of crypto have significantly improved, laying the foundation for a strong growth of the altcoin market in the quarter. However, the bank also noted that "no positive developments have been reflected in prices" so far.

In April, Bitcoin's dominance rate reached its highest level in 4 years, indicating that investors are shifting their capital to digital assets that are considered safer.

Nevertheless, Sygnum asserts that regulatory advances in the U.S. – such as President Donald Trump's establishment of the digital asset reserve and progress in stablecoin regulations – could drive wider acceptance of cryptocurrency.

"We expect that protocols attracting a large number of users will have superior performance and the dominance of Bitcoin will decrease," Sygnum wrote.

Focus on economic value to enhance competitiveness

Sygnum also stated that the level of competition will increase as the market focuses on economic value. Increased competition often leads to better products, ultimately benefiting users:

"The increasing focus of the market on economic value forces projects to compete more vigorously to attract users and revenue, with emerging protocols such as Toncoin, Sui, Aptos, Sonic, or Berachain pursuing different directions."

Sygnum added that although high-performance blockchains address the limitations of Bitcoin, Ethereum, and Solana, they still struggle to achieve widespread acceptance and generate revenue from transaction fees.

Market Analysis by Market Capitalization | Source: SygnumThe report highlights several approaches that have proven to be more sustainable. For example, Berachain's method – encouraging validators to provide liquidity for DeFi applications, Sonic's method – rewarding developers who can attract and retain users, and Toncoin's advantage thanks to its connection with Telegram, allowing access to 1 billion users.

In addition to layer 1 blockchains, Sygnum also emphasizes layer 2 networks like Base also have potential. The report points out that although the memecoin craze on this blockchain has pushed user numbers and revenue to record highs, the drop in interest after the memecoins lose their appeal occurs just as quickly. Nevertheless, Sygnum notes that Base remains the leading layer 2 network according to metrics such as daily transactions, throughput, and total value locked (TVL).

Memecoin is still the dominant trend in crypto in Q1

Despite the price drop, memecoins remain one of the dominant stories in the crypto market in Q1 2025. A recent report from CoinGecko shows that memecoins still dominate the market in the first quarter of the year, with global investor interest reaching 27.1% – only behind AI-related tokens (AI), which account for 35.7%.

While retail investors are still busy with memecoins, financial institutions have a different approach. Asset management company Bitwise reported on April 14 that public companies are actively buying Bitcoin. At least 12 listed companies purchased Bitcoin for the first time in Q1 2025, bringing the total amount held by public companies to 57 billion.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors should conduct thorough research before making any decisions. We are not responsible for your investment decisions.

Đình Đình