Source: Cointelegraph Original: "{title}"

Swiss bank Sygnum stated that as digital asset regulation continues to improve, altcoins may see a resurgence in the second quarter of 2025.

In its investment outlook report for the second quarter of 2025, Sygnum noted that the regulation of cryptocurrency use cases has "significantly improved," laying the groundwork for a strong rebound in the altcoin sector in the second quarter. However, the bank added that "all these positive developments have yet to be fully priced in by the market."

In April, Bitcoin (BTC) dominance reached a four-year high, indicating that cryptocurrency investors are shifting funds towards assets considered relatively safer.

However, Sygnum believes that regulatory developments in the U.S., such as President Trump's establishment of a digital asset reserve and the push for stablecoin regulation, could drive broader adoption of cryptocurrencies.

Sygnum wrote, "We expect protocols that succeed in user acquisition to perform exceptionally well, while Bitcoin's dominance will decline."

Sygnum also stated that as the market focuses more on economic value, competition will intensify. Increased market competition typically leads to better products, ultimately benefiting consumers:

Sygnum added that while high-performance blockchains have addressed some limitations of Bitcoin, Ethereum (ETH), and Solana blockchains, these chains still face challenges in achieving meaningful adoption rates and fee revenue.

The report emphasized that some approaches have proven to be more sustainable. This includes Berachain incentivizing validators to provide liquidity for decentralized finance (DeFi) applications, Sonic rewarding developers who can attract and retain users, and Toncoin reaching a billion users through its association with Telegram.

In addition to layer-1 chains, Sygnum also highlighted the potential of layer-2 networks like Base. The report noted that while the meme coin craze on the blockchain had pushed its user numbers and revenue to new highs, these metrics also saw a sharp decline as meme coins began to lose momentum.

Despite this, Sygnum pointed out that Base still maintains a leading position among layer-2 networks in terms of daily trading volume, throughput, and total value locked.

Despite recent price declines, meme coins remained the dominant crypto narrative in the first quarter of 2025. A recent report from CoinGecko emphasized that meme coins continued to be the dominant crypto narrative in the first quarter of 2025. The crypto data company stated that meme coins accounted for 27.1% of global investor interest, second only to artificial intelligence (AI) tokens at 35.7%.

While retail investors remain enthusiastic about meme coins, institutional investors have taken a different approach. Asset management firm Bitwise reported on April 14 that publicly traded companies are accumulating Bitcoin. In the first quarter of 2025, at least 12 publicly traded companies made their first purchases of Bitcoin, bringing the total holdings of publicly traded companies to $57 billion.

Related: CoinGecko: AI tokens and meme coins dominate the cryptocurrency narrative in the first quarter of 2025.

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