The long-awaited “altseason” could finally be on the horizon, according to digital asset bank Sygnum’s Q3 2025 Investment Outlook. The report highlights a mix of rising liquidity, declining Bitcoin dominance, and greater regulatory clarity as key catalysts driving a shift from Bitcoin to alternative cryptocurrencies, or altcoins.

Earlier this year, the altcoin market suffered from global tensions and uncertainty around U.S. fiscal policy. However, Sygnum believes the landscape is shifting fast. As regulations become clearer, particularly around staking and token models, investors are regaining confidence and reallocating capital into promising altcoin projects.

Sygnum noted that altcoins with real-world use cases and sustainable economics are attracting particular interest. “Perhaps this shift is already underway,” the bank stated, referencing increasing onchain activity and capital rotation trends.

Bitcoin Hits Record Highs, But Dominance Declines

While altcoins are making a comeback, Bitcoin remains at the centre of market attention. BTC surged past an all-time high of $123,000 on July 14, driven by a persistent imbalance between supply and demand. Spot Bitcoin ETFs are playing a major role in this bullish trend, with over $160 billion in assets under management and 110,000 BTC accumulated in the last quarter alone.

Despite this surge, Bitcoin’s market dominance has dropped more than 6% recently, suggesting a growing investor appetite for altcoins. Sygnum interprets this as a potential signal that the next phase of the market cycle, altseason may be underway.

Ethereum Strengthens After Pectra Upgrade

Ethereum is also benefiting from recent technical upgrades and regulatory decisions. The successful Pectra upgrade introduced multiple improvements to the network, including a raised staking cap. This has driven further institutional interest and improved sentiment.

Importantly, the U.S. Securities and Exchange Commission clarified that Ethereum protocol staking does not fall under securities law, giving investors more confidence in staking-based yields.

Sygnum reported that Ether has “conclusively broken its long-term downtrend” and is experiencing a sharp increase in institutional demand. One example is Sharplink’s planned $1 billion ETH allocation. Additionally, major financial players such as BNY Mellon and Société Générale are launching stablecoin and tokenization projects on Ethereum, adding further credibility to the ecosystem.

DeFi and DEXs See Record Activity

The report also highlights major growth across decentralized finance (DeFi) and decentralized exchanges (DEXs). In Q3 2025, DEXs captured 30% of all crypto spot trading volume, driven in part by a flurry of memecoin launches. PancakeSwap led the surge on the BNB Chain, while Solana’s PumpSwap overtook Raydium to become the chain’s top DEX.

DeFi lending reached a record high of $70 billion in total value locked (TVL), with active loans on Ethereum also hitting new highs. Meanwhile, liquid staking now accounts for over 30% of all Ether in circulation.

Sygnum noted that DeFi lending is particularly sensitive to bullish market sentiment, with rising prices encouraging investors to take on more risk through leveraged positions.

Caution Around Memecoin Mania

Despite the strong fundamentals across many areas of the crypto market, Sygnum also issued a word of warning. The current surge in altcoin and DEX activity could trigger another memecoin-driven bubble. These highly speculative tokens often attract short-term hype but have a history of sharp corrections.

The bank advised investors to remain cautious and focus on projects with strong use cases and credible teams.

Sygnum’s Q3 2025 Investment Outlook paints a promising picture for the altcoin market, pointing to a mix of increased liquidity, clearer regulations, and falling Bitcoin dominance as the driving forces behind the trend. Ethereum’s revival, DeFi’s continued growth, and fresh institutional inflows all suggest that the crypto market is entering a more mature and potentially profitable phase. However, investors are reminded to stay wary of speculation-driven bubbles as the altseason heats up.