The expected improvements in the US regulatory landscape are disproportionately benefiting altcoins, Sygnum’s Head of Investment Research, Katalin Tischhauser, writes in our Crypto Market Outlook 2025. Download the full report to get the complete story.
Altcoins have been depressed by SEC litigation and the threat of most of them being classed as securities. The lower regulatory risk is improving altcoin fundamentals, and an upward price correction in response to the improved regulatory landscape is rational.
Some of this expectation may have already been priced in, as Bitcoin dominance has declined slightly since the elections. However, as we get confirmation that the SEC’s approach is indeed departing from Gary Gensler’s legacy, this will justify further altcoin appreciation.
The strongest fundamental driver for altcoins would be regulation tailored to the asset class that allows value to accrete to the tokens without triggering a compliance burden that projects cannot reasonably fulfil.
At the same time, Bitcoin’s fundamentals remain strong, especially if central banks and local governments start building Bitcoin reserves. This would be a high bar for altcoins to beat, especially as there are several factors potentially holding altcoins back.
Less rotation
The typical rotation from Bitcoin to altcoins in later-stage bull markets is expected to be muted
in the current cycle. Crypto market cycles have been extremely analogous so far, both in terms of their duration and in terms of the progression of the cycle phases. One aspect of past bull markets that has repeated in each case so far is the so-called “alt season”, when substantial profits in Bitcoin are recycled into other tokens as risk appetite increases, investors’ outlook on the crypto industry becomes ever more optimistic and profits made are reinvested in other opportunities.
However, recycling Bitcoin profits into altcoins is likely to be far less of a feature of the current bull market, as the new money flowing into the Bitcoin ETFs was largely incentivised by the availability of an easily tradeable traditional wrapper. The Bitcoin ETFs provided market access to investors who are not set up to trade and settle direct investments in crypto assets. These holders will not be selling their Bitcoin ETFs to buy altcoins.
Of course, some rotation is expected in this cycle as well. We have seen quite a lot of new money flowing directly into the spot markets, too, as indicated by the almost 50 percent year-to-date increase in stablecoin market capitalisation. These investors are likely to follow the pattern of recycling profits and increasing their risk profile as the bull market progresses.
Sign up for Future Finance
Join our 40,000 strong global community to future proof your investments. Sign up now to be the first to receive our news, product launches, industry reports and educational series.
Disclaimer: The information in this publication pertaining to Sygnum Bank AG (“Sygnum”) is for general information purposes only, as per date of publication, and should not be considered exhaustive. This publication does not consider the financial situation of any natural or legal person, nor does it provide any tax, legal or investment advice. This publication does not constitute any advice or recommendation, an offer or invitation by or on behalf of Sygnum to purchase or sell any assets. No elements of precontractual or contractual relationship are intended. While the information is believed to be from accurate and reliable sources, Sygnum makes no representation or warranties, expressed or implied, as to the accuracy of the information. Sygnum expressly disclaims any and all liability that may be based on such information, omissions, or errors thereof. Any statements contained in this publication attributed to a third party represent Sygnum‘s interpretation of the data, information and/or opinions provided by that third party either publicly or through a subscription service, and such use and interpretation have not been reviewed by the third party. Sygnum reserves the right to amend or replace the information, in part or entirely, at any time, and without any obligation to notify the recipient of such amendment / replacement or to provide the recipient with access to the information. Simultaneously, there is no obligation of Sygnum to inform recipients of information, if before provided information later becomes outdated, inaccurate or obsolete, unless otherwise provided by applicable law. The information provided is not intended for use by or distributed to any individual or legal entity in any jurisdiction or country where such distribution, publication or use would be contrary to the law or regulatory provisions or in which Sygnum does not hold the necessary registration, approval authorisation or license. Except as otherwise provided by Sygnum, it is not allowed to modify, copy, distribute or reproduce, display, license, or otherwise use any content for commercial purposes.