Sygnum Analysts Signal Approaching Altcoin Season as Market Dynamics Shift

The surge in liquidity, improvements in regulation, and a spike in on-chain activity are creating favorable conditions for the onset of an altcoin season. This is highlighted in Sygnum’s third-quarter report, as noted by Cointelegraph.

In the first half of the year, international political tensions and uncertainty surrounding the financial strategy of the USA led to widespread sell-offs of altcoins.

«As the regulatory status of altcoins becomes clearer, capital may flow toward projects with real use cases and sustainable tokenomics. It seems this shift may already be underway, as indicated by various data points,» the experts stated.

They pointed to a 6% decline in Bitcoin’s dominance over the last month, a deviation from its peaks in 2021. This suggests a rising interest among investors in altcoins.

Despite this, analysts noted that Bitcoin remains in a bullish trend. The imbalance between supply and demand continues to drive the digital gold toward new historical highs; on July 14, the cryptocurrency surpassed its previous record of $123,000.

Positive momentum is further fueled by capital inflow into ETFs. The total assets managed by crypto funds have now exceeded $160 billion. In just the last quarter, these entities collected over 110,000 BTC.

Ethereum is showing a similar trajectory:

Experts emphasized that Ethereum has «definitively overcome its long-term downward trend.» This was aided by the Pectra upgrade and a notable increase in institutional demand. The company Sharplink plans to invest $1 billion in ETH.

At the same time, Wall Street giants such as BNY Mellon and Societe Generale are increasingly interested in stablecoins based on the second-largest cryptocurrency network.

Sygnum analysts also highlighted the achievements of the decentralized finance sector. According to their data, DEX platforms captured 30% of the total volume of spot cryptocurrency trading in the last quarter. PancakeSwap took the lead on BNB Chain, while Pump.fun’s PumpSwap surpassed Raydium on Solana.

The volume of DeFi lending reached an all-time high of $70 billion. Currently, 30% of Ethereum’s liquid supply is also locked in staking. Experts identified these factors as the «main beneficiaries of the rally» in the cryptocurrency market.

However, they cautioned that the current excitement surrounding altcoins could trigger a repeat of the 2021 scenario, where a sharp rise was followed by a correction. Meme coins, which lack fundamental value, pose particular risks, according to Sygnum.

It’s worth noting that on July 22, CryptoQuant author and on-chain analyst Timo Oinonen pointed out the end of the era of «mass altcoin seasons.» He indicated that the next growth cycle may affect only a small number of projects, with few expected to outperform Bitcoin in returns.