Sygnum analysts pointed out the approaching altcoin season

The increase in liquidity, improved regulation, and surge in on-chain activity create favorable conditions for the onset of altseason. This is stated in Sygnum's third-quarter report, writes Cointelegraph.

In the first half of the year, geopolitical tensions and uncertainty in US financial policy led to a massive sell-off of altcoins.

"As the regulatory status of altcoins becomes clearer, capital may flow into projects with real use cases and sustainable tokenomics. This shift may have already begun, as indicated by some data," experts said.

They pointed out a 6% decrease in Bitcoin's dominance over the past month. The metric has deviated from the highs of 2021. This hints at a growing interest from investors in altcoins.

Bitcoin domination for the last month. Source: TradingView.## Bitcoin and Ethereum will rise.

At the same time, analysts noted that the bullish trend of Bitcoin continues. The imbalance of supply and demand continues to push digital gold to new historical highs — on July 14, the cryptocurrency broke the record of $123,000.

The positive dynamics are supported by the influx of capital into ETFs. The value of assets under the management of crypto funds has already exceeded $160 billion. Only in the last quarter, these structures accumulated more than 110,000 BTC.

The inflow chart for Ethereum-ETF. Source: SoSoValue.Ethereum shows a similar trend:

• ETH balances on exchanges are decreasing;
• Ethereum-based ETF records unprecedented inflows.

Experts emphasized that Ethereum "has definitively overcome the long-term downward trend." This was facilitated by the Pectra upgrade and a sharp increase in demand from institutional investors. The company Sharplink plans to invest $1 billion in ETH.

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

DeFi and DEX Records

Sygnum analysts also highlighted the successes of the decentralized finance sector. According to their data, in the last quarter, DEX captured 30% of the total spot trading volume in cryptocurrencies. Leadership on the BNB Chain was seized by PancakeSwap, while the PumpSwap platform from Pump.fun surpassed Raydium on Solana.

The volume of DeFi lending has reached an all-time high of $70 billion. Currently, 30% of the liquid supply of Ethereum is also locked in staking. Experts have called these factors the "main beneficiaries of the rally" in the crypto market.

However, they warned: the current hype around altcoins may provoke a repeat of the 2021 scenario. Then, a sharp rise was followed by a correction. Meme coins - projects without fundamental value - pose a particular danger, Sygnum stated.

On July 22, CryptoQuant author and on-chain analyst Timo Oinonen pointed out the end of the era of "mass altcoin seasons". According to him, the next growth cycle will not affect the entire market — only a few projects will outperform Bitcoin in terms of returns.