Sygnum’s Q3 2025 Investment Outlook suggests the long-awaited altseason could finally arrive as Bitcoin dominance declines, liquidity floods markets, and regulators clarify staking rules.Key TakeawaysSygnum sees capital rotation: Regulatory clarity and liquidity expansion may ignite the long-awaited altseason.Bitcoin dominance slipping: BTC’s market share fell more than 6% after hitting its highest level since 2021.ETH and DeFi leading narrative: Ethereum staking, ETF inflows, and DeFi growth point to structural altcoin demand.Sygnum Flags Key Shift: From Bitcoin to AltcoinsDigital asset bank Sygnum says the crypto market may be on the verge of the long-anticipated altseason, according to its Q3 2025 Investment Outlook shared with Cointelegraph.Earlier this year, geopolitical tensions and US fiscal uncertainty triggered a broad altcoin sell-off. But market dynamics have shifted.“As regulatory clarity extends to altcoins, capital could rotate toward projects with real economic use cases and sustainable token models, and perhaps this shift is already underway as some sectors currently show,” Sygnum said.The report points to Bitcoin dominance — which recently fell over 6% after hitting its highest level since 2021 — as early evidence of capital flowing back into the altcoin sector.Bitcoin Still Strong, but Liquidity Is SpreadingDespite the rotation narrative, Bitcoin (BTC) remains structurally bullish.BTC hit an all-time high above $123,000 on July 14, fueled by spot ETF demand.“Bitcoin Spot ETFs have now exceeded USD 160 billion in assets under management, accumulating more than 110,000 BTC last quarter alone,” the bank wrote.Ethereum (ETH) is benefiting from similar institutional momentum, with nearly 30% of liquid supply staked and continued ETF inflows following the Pectra upgrade.The SEC’s clarification that protocol staking “does not fall under securities law” has added further confidence for institutions.Ethereum and DeFi Take the LeadSygnum says ETH has “conclusively broken its long-term downtrend.”Institutional demand is accelerating, with Sharplink planning a $1 billion ETH allocation and major financial players — including BNY Mellon, Société Générale, and a Trump-backed USD1 stablecoin — launching tokenization and stablecoin products on Ethereum.Meanwhile, DeFi’s growth is surging:DEX share: Decentralized exchanges captured 30% of spot trading last quarter, led by PancakeSwap and Solana’s PumpSwap.DeFi lending: Locked value hit a record $70B, while liquid staking surpassed 30% of ETH’s supply.“The DeFi lending sector is one of the strongest beneficiaries of market rallies,” Sygnum noted, as leveraged exposure rises with investor risk appetite.Caution: Memecoin Bubble RiskDespite optimism, Sygnum warned the current altcoin rally could spark another memecoin bubble:“History suggests such bubbles end in a sharp correction if unchecked,” the report cautioned.
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