- Sygnum Bank crypto report predicts that profit rotation from Bitcoin to altcoins may be halted in 2025.
- The current bull cycle could favor meme coins above other sectors.
- Stablecoins may be set for wider mainstream adoption in 2025.
Sygnum's crypto market outlook for 2025 predicts that the much-anticipated alt season may disappoint investors amid growing stablecoin adoption and meme coins leading the market rally.
Altcoins could upset investors amid growing stablecoin adoption
Digital asset banking group Sygnum released its market forecast for 2025, highlighting the latest trends in crypto year to date, as well as what investors may expect in the coming year.
The report suggested that the current crypto market rally will likely continue in 2025, considering several world-class investors and companies have yet to invest in cryptocurrencies. The availability of Bitcoin ETFs and growing regulatory clarity around crypto assets could provide room for these investors to include BTC in their portfolios, Sygnum analysts noted.
However, despite their bullish outlook, they suggested that altcoins could upset investors in the coming year as the traditional rotation of profits from Bitcoin to other assets, which characterizes the alt season, may not occur in 2025. This is largely due to the "new money" flowing into Bitcoin ETFs rather than crypto exchanges. This comes amid high hopes for the commencement of an alt season among crypto community members.
"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," the report noted.
Likewise, the regulatory issues surrounding altcoins — apart from Ethereum — may keep investors skeptical about diverting their funds to other cryptocurrencies.
Conversely, stablecoins are expected to witness more adoption in the coming year as more companies are considering adding them as a payment method.
The growth in the stablecoin sector has been enormous in 2024, with their market capitalization rising over 50% since the beginning of the year. Sygnum suggests that broader regulations regarding these assets are key to their adoption, particularly in emerging markets.
Additionally, the report notes that meme coins are the favorites to lead the altcoin rally in the new year as alt season "may simply be a meme coin season in the current cycle."
Notably, seven of the top ten best-performing crypto assets year-to-date are meme coins, pointing at a major diversion of funds into this asset class.
Best Performing Crypto Assets | Sygnum
Sygnum analysts highlighted that besides Dogecoin (DOGE), which could see increased value if Elon Musk integrates it as a payment system, other meme tokens are a reflection of gambling among traders.
Bitcoin, altcoins, stablecoins FAQs
Bitcoin is the largest cryptocurrency by market capitalization, a virtual currency designed to serve as money. This form of payment cannot be controlled by any one person, group, or entity, which eliminates the need for third-party participation during financial transactions.
Altcoins are any cryptocurrency apart from Bitcoin, but some also regard Ethereum as a non-altcoin because it is from these two cryptocurrencies that forking happens. If this is true, then Litecoin is the first altcoin, forked from the Bitcoin protocol and, therefore, an “improved” version of it.
Stablecoins are cryptocurrencies designed to have a stable price, with their value backed by a reserve of the asset it represents. To achieve this, the value of any one stablecoin is pegged to a commodity or financial instrument, such as the US Dollar (USD), with its supply regulated by an algorithm or demand. The main goal of stablecoins is to provide an on/off-ramp for investors willing to trade and invest in cryptocurrencies. Stablecoins also allow investors to store value since cryptocurrencies, in general, are subject to volatility.
Bitcoin dominance is the ratio of Bitcoin's market capitalization to the total market capitalization of all cryptocurrencies combined. It provides a clear picture of Bitcoin’s interest among investors. A high BTC dominance typically happens before and during a bull run, in which investors resort to investing in relatively stable and high market capitalization cryptocurrency like Bitcoin. A drop in BTC dominance usually means that investors are moving their capital and/or profits to altcoins in a quest for higher returns, which usually triggers an explosion of altcoin rallies.
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