The second quarter of the year witnessed an unexpected rise in three distinct tokens: brett (BRETT), Ton Network’s TON, and Kaspa’s KAS. These digital assets outperformed the leading cryptocurrency, Bitcoin (BTC), which saw a decline that also dragged down most major cryptocurrencies, including Ether (ETH).

BRETT, a memecoin from the Base Chain inspired by the Boys’ Club comic series character, skyrocketed to 15 cents, marking the most substantial performance among the top 100 coins by market value, as reported by TradingView and CoinMarketCap. Toncoin (TON), the native cryptocurrency of The Open Network (TON) blockchain, experienced a 42% increase, reaching $7.65. Similarly, Kaspa blockchain’s KAS surged over 35%. In contrast, the overall crypto market capitalization declined by 13.8% to $2.2 trillion.

Meme Coin Mania

BRETT’s ascent was part of a broader trend in meme coins. According to DYOR’s Dune-based relative strength crypto narrative tracker, the meme coin sub-sector increased by over 45% in three months, while others recorded losses. Culture coin mog (MOG) also emerged as a top performer, driven by positive sentiment and a devoted following on social platforms like X. MOG’s market capitalization soared from $220 million in early April to over $700 million, briefly ranking it among the top hundred tokens.

Read more: Meme Coin Liquidity Peaks Amid Persistent Bid-Ask Spread Risks

This phenomenon is typical of a bullish cycle, where investors rotate profits from larger coins like Bitcoin into smaller tokens, fueling a price surge and retail investor FOMO (fear of missing out). BRETT began its significant rise in May as Bitcoin consolidated at record highs near $70,000, with its market capitalization nearing $2 billion at one point.

“The $2.0 billion mark is a liquidity wall many established meme coins hit before profit-taking and sideways volatility ensue. For every billion higher, it requires a lot of momentum and risk-taking from retail investors to reach the levels of DOGE and SHIB,” said Kenny Hearn, chief investment officer at SwissOne Capital, in an interview with CoinDesk. SwissOne’s Top 50 smart passive index fund holds six of the largest meme coins following this quarter’s rebalance.

TON and Telegram Integration

TON’s impressive performance can be attributed to its integration with the messaging app Telegram, which has 1.56 billion users worldwide and 800 million active users. “A toncoin (TON)-based economy is starting to take root in the messaging app Telegram,” said Justin Hyun, TON’s Director of Investments, in April.

Several catalysts boosted TON’s adoption, including Telegram’s shift to TON payments for advertisements and the Open League reward program. TON’s network activity surged with the integration of tether (USDT), the largest dollar-pegged stablecoin, and the launch of Notcoin’s digital token. By June, TON’s daily active addresses reached nearly 600,000, surpassing Ethereum’s figures.

“During Q2, TON’s daily active users experienced significant growth, partly due to the introduction of mini apps, which are decentralized apps embedded in Telegram. Notcoin, one of these apps, gained traction as users could ‘mine’ Notcoin by simply pressing a button within Telegram,” explained Katie Talati, head of research at Arca, in an email to CoinDesk. Other significant catalysts included the launch of USDT on TON and Pantera’s recent substantial investment in TON.

Kaspa’s Blockchain Innovation

Kaspa’s parent proof-of-work (PoW) blockchain’s efforts to address the blockchain trilemma (scalability, decentralization, and security) attracted investor attention. Kaspa’s GHOSDAG allows for asynchronous, parallel transaction processing, enhancing performance and security while retaining the PoW consensus mechanism’s integrity.

“It appears this team is on a mission to solve the trilemma through its DAG structure, supporting speed and scalability while leveraging PoW’s security benefits. The market’s support for this innovative technology is evident,” Hearn noted. KAS also received a bullish boost from Marathon Digital’s announcement of its mining activities to diversify its revenue stream.

Future Outlook

Historically, the third quarter has been the weakest for Bitcoin, with an average gain of just 5% over the past 13 years compared to 60% in the second and fourth quarters. Political uncertainties and potential changes in U.S. presidential candidates could affect market sentiment until the November elections. Additionally, central banks may avoid premature monetary policy easing, following BIS’s advice.

Despite these challenges, crypto sub-sectors with strong fundamentals may continue to thrive. “The long-term game is crucial for many projects delivering real use cases,” Hearn added. Arca’s Talati indicated potential growth in bitcoin mining stocks, artificial intelligence, gaming, and DeFi sectors.