What happened

This week, a handful of smaller-cap cryptocurrencies saw impressive momentum to the upside. Among this week's winners were the following tokens:

  • Aragon (ANT 5.61%) absolutely skyrocketed, rising 72.6% from Friday's close at its high this week.
  • Harmony (ONE 6.27%) surged 21.7% at its weekly high from Friday's close.
  • Quant (QNT 3.73%) also had a great week, rising 16.7% at its high from where it ended last week.

Aragon's rise appears to be the result of a surge in interest in this decentralized autonomous organization (DAO) creation tool, given increased attention to DAOs following a hackathon and DAO tooling panel held on a popular blockchain social platform. Aragon saw the bulk of its gains materialize midweek, following this event.

Harmony, a relatively small layer-one cryptocurrency (60th overall in market cap rankings) got a few boosts this week. High-profile metaverse game DeFi Kingdoms announced an expansion of its in-game NFTs -- DeFi Kingdoms contributes more than half the total value locked on the Harmony blockchain. Orbs, a public blockchain infrastructure aimed at mass usage applications, expanded to the Harmony blockchain this week. Additionally, PixelDAO tapped Harmony as the blockchain of choice to launch its reserve currency tailored for the metaverse.

Quant's rise as an interoperability play in the blockchain space during declines among major cryptocurrencies such as Bitcoin and Ethereum have suggested to some investors that this alt coin could be a hedge to market volatility in the crypto world.

Zeros and ones on a screen.

Image source: Getty Images.

So what

These are a lot of catalysts for investors to consider. However, there are a few underlying trends worth considering with this news.

First, the rise of decentralized autonomous organizations, and a growing demand for cryptocurrencies that provide exposure to interoperability, appear to be strong catalysts. Investors are looking for blockchain technologies that are forward looking. Among the smaller-cap tokens out there, Aragon, Harmony and Quant each appear to be gaining favor among investors for their growth profile right now.

Now what

Now, each of these three cryptocurrencies has seen weakness today on macroeconomic concerns around tightening monetary policy. Accordingly, these cryptocurrencies are not immune to broad-based sector-driven moves. However, there's a divergence forming, and investors looking for tokens with weekly momentum may be considering these three.

Of course, it's important to take a holistic approach to the crypto sector. This week has provided a snapshot of what may be to come for investors -- more volatility. Accordingly, investors looking to create a crypto portfolio should seek to do so in a diversified way, across a number of assets, to improve risk-adjusted returns over time. These three smaller-cap tokens may represent unique options for investors looking to do that.