L1 breaks the ice first: SUI up 24% weekly, TON doubles in three days - is a mini altcoin season knocking at the door?

Author: Kuli, TechFlow

Will they return to crypto for a meal?

The crypto market has seen a slight recovery over the past two weeks. Aside from the localized narrative around Uniswap Hook V4, a batch of veteran coins has staged a comeback.

Among them, the L1 sector has performed well, with ZEC, TON, and SUI showing impressive gains. We introduced ZEC last week, while SUI and TON have charted their own independent paths against a flat broader market: TON surged from $1.35 to $2.89 in three days, and SUI broke through $1.24 with a weekly gain of over 24%.

Each chain has its own grounded, verifiable catalysts in terms of news and fundamentals. At the same time, does the L1 sector's early movement signal that a broader altcoin rotation is about to begin?

BTC Dominance Hits a New Year-to-Date High, But L1 Sector Moves First

Let's start with the macro backdrop.

According to Bitget data, as of May 9, BTC dominance has risen to 60.3%, its highest level for 2026. The altcoin season index from Blockchaincenter reads around 35, well below the 75 threshold needed to confirm an altcoin season. The market remains in a "Bitcoin season."

However, structural signals have emerged. BTC dominance has been consolidating in the 58%-60% range for nearly eight months (August 2025 to April 2026), with the RSI showing signs of stagnation.

Analyst el_crypto_prof on X noted that the weekly structure of the total altcoin market cap (excluding BTC) closely resembles the patterns seen before the start of the altcoin seasons in 2016-2017 and 2020-2021. In both historical instances, the combination of high dominance and a low altcoin season index ultimately appeared 2 to 6 months before the most profitable altcoin market rallies began.

It is precisely within this window—where the macro has not yet confirmed a shift, but individual stocks are already moving—that SUI and TON have each charted their independent trajectories.

TON: Telegram Transforms from "Partner" to "De Facto Controller"

TON's recent rally has a precise trigger point: On May 4, Telegram founder Pavel Durov announced on X that Telegram will replace the TON Foundation as the largest validator and primary driving force of the TON network.

The significance of this event needs to be viewed in historical context.

In 2020, Telegram was forced to exit the TON project due to SEC enforcement action, returning $1.22 billion in investor funds and paying an $18.5 million fine. Durov announced the project's termination in a blog post. Subsequently, the TON Foundation operated as an independent community for five years.

Six years later, Durov personally returned, staking approximately 2.2 million TON, and the ton.org domain switched to the MTONGA (Make TON Great Again) themed page.

According to The Defiant, TON surged 33% on the day, hitting an intraday high of $1.90. By May 7, the price had soared from $1.35 at the beginning of the month to around $2.89, a three-day gain of approximately 114%, with a 24-hour trading volume of $3.31 billion—a historical high for TON. Data from CoinGlass shows that futures open interest concurrently rose to $628 million, setting a three-year record.

Before Telegram's takeover, Durov executed a series of intensive technical upgrades over a month:

1. On April 9, the Catchain 2.0 consensus upgrade went live, reducing block time from 2.5 seconds to 400 milliseconds and increasing throughput by approximately 10 times. In Durov's own words on X, TON is now "the fastest chain in terms of finality among all major L1s."
2. By the end of April, transaction fees were reduced from around $0.0023 to approximately $0.0005, a 6-fold decrease, with fixed fees that do not fluctuate with congestion. Durov stated that "most transactions will be completely free" going forward.

Institutional adoption has followed suit. Japan's Rakuten Wallet launched TON spot trading in mid-April, and CoinShares listed a TON staking ETP on the Swiss SIX Exchange. Reports indicate that the USDT supply on the TON network has exceeded $500 million, and the monthly trading volume of perpetual contracts via Telegram's built-in wallet surpassed $1 billion.

TON's technical upgrades and developments continue. Durov's goal is to transform Telegram into a super-app entry point integrating payments, DeFi, AI agents, and private communication, with TON serving as the underlying financial layer.

However, the author believes that Telegram becoming the largest validator inherently increases the network's dependence on a single entity. If Telegram faces regulatory scrutiny again (the residual impact of the SEC case remains), or if its validator node experiences failures, the impact on the network and token price would be significantly more severe than under a decentralized architecture.

SUI: Completing the Institutionalization 'Triple Play' Within a Month

SUI's catalysts come from a different direction, with a dense rollout of institutional infrastructure within one month.

If you were to list which crypto assets simultaneously possess a US spot ETF, CME futures contracts, and significant staking by a publicly listed company, previously it was only BTC and ETH. Starting in May, SUI joined the club:

1. Spot ETF Cluster (Late February): 21Shares TSUI (Nasdaq, 0.30% fee), Canary Stake SUI ETF, and Grayscale SUI Staking ETF were listed within a week. Bitwise, Franklin Templeton, and VanEck also have related initiatives.
2. CME Futures Launch (May 4): Standard contract (50,000 SUI), Micro contract (5,000 SUI), cash-settled. On May 6, FalconX and G-20 Group executed the first block trade. Starting May 29, CME's entire crypto derivatives will transition to 24/7 trading.
3. Large-Scale Staking by Listed Company (May 9): Nasdaq-listed SUI Group Holdings converted its entire stake of 108.7 million SUI (2.7% of circulating supply) to native staking, causing the price to jump 13% on the day.
4. Emerging Market Payment Integration (May 9): At Sui Live Miami, Nigerian fintech company Paga announced deep integration with Sui, planning to use the native stablecoin USDsui to offer users USD accounts and tokenized bonds. Paga processed $11 billion in transactions in 2025.

According to CryptoNews analysis, SUI now boasts a complete "three-tier institutional access structure": spot ETFs for passive allocation, CME futures for active hedging, and staking products for yield generation. Only BTC and ETH had such a structure 18 months ago.

As of May 10, SUI is trading at $1.24, up over 24% for the week, with trading volume exceeding $1.2 billion. On the day CME futures launched, SUI actually dipped slightly to $0.91. The real rally began five days later, driven by the staking lock-up and the Paga partnership. Concurrently, tokens within the SUI ecosystem also benefited, showing decent gains.

L1 Recovery: Can It Spread to Altcoins?

Looking at SUI and TON together, their catalyst structures are entirely different. However, the commonality is that project-specific, verifiable fundamental events are driving the price action, rather than macro liquidity or sentiment beta.

Returning to the macro level, the conditions for confirming a broad altcoin season are currently unmet. According to historical patterns compiled by Phemex, a reliable rotation signal requires BTC dominance to fall below 54% and sustain for over two weeks, and the altcoin season index to break above 75. The current readings of 60% dominance and an index of 35 remain a significant distance from these thresholds.

Historical data provides a reference point:

In late 2019 and late 2020, the combination of high BTC dominance and a low altcoin season index ultimately preceded large-scale altcoin rallies by 2 to 6 months.

At those times, it was also the leading projects with independent catalysts that moved first, with capital gradually rotating towards mid and small-cap assets. The early moves in SUI and TON may place us precisely at this stage of "individual projects leading, overall rotation pending confirmation."

The water is warming, and ducks have already started moving. But the ice on the river surface hasn't completely melted yet.