Cryptocurrency Market Sentiment Warms Up, MCP Emerges as New AI Frontier

Original Article Title: "Crypto Market Sentiment Improves, MCP Emerges as New AI Track｜Frontier Lab Crypto Market Weekly Report"

Original Source: Frontier Lab

Market Overview

Overall Market Summary

This week, the cryptocurrency market was in an upward trend, with both the total market cap and the vast majority of Altcoins showing an uptrend. The recent low market sentiment has been significantly alleviated, with the market sentiment index rising from 55% to 79%, entering the bullish zone overall. The stablecoin market cap continued its uptrend from last week, continuing to rise this week (USDT reached 145.7 billion, USDC reached 61.9 billion, with increases of 0.62% and 2.32% respectively), indicating that institutional funds have increased their entry positions. The growth was primarily driven by U.S. funds, showing that this week's uptrend has significantly boosted U.S. investor sentiment, accelerating their entry into the market.

This week's uptrend was mainly influenced by the easing of the U.S.-China tariff policy, Trump's statement that he does not intend to fire Fed Chairman Powell, and the appointment of the new SEC Chairman Paul Atkins, who holds a friendly attitude towards the crypto industry, thereby promoting a strong rebound in the market this week. However, the market still faces uncertainty from the looming U.S. economic downturn and tariffs, so this week's uptrend can only be seen as a rebound from the oversold period, rather than a market trend reversal.

Next Week Predictions

Bullish Targets: SOL, SNX

SOL: Comprehensive Recovery of the Solana Ecosystem, Rise of Meme Tokens, Stablecoins, and Decentralized Exchanges Driving Market Recovery

Meme Token Market Recovery

This week, with the recovery of the market, the trading volume of Solana on-chain Meme tokens has significantly increased. The amount of Meme tokens bought has consistently exceeded the amount sold, driving the rapid recovery of on-chain Solana data. This indicates that despite the previous retreat of the Meme trend causing losses to on-chain users, investor interest in Meme tokens remains strong. Additionally, after Pump.fun launched PumpSwap, PumpSwap's daily trading volume gradually increased, maintaining levels between 3 billion and 4.8 billion USD, accounting for 9% to 19% of Solana's on-chain DEX trading volume. This indicates a gradual recovery of the Meme market. The activity in the Meme token market helps boost SOL's price in the short term.

Solana On-Chain Meme Coin Trading Activity (Data Source: https://dune.com/pseudocode88_aux/solana-meme-token-analysis)

PumpSwap Daily Trading Volume (Data Source: https://dune.com/pseudocode88_aux/solana-meme-token-analysis)

On-Chain Stablecoin Supply Growth

The supply of stablecoins on the Solana blockchain has been rapidly increasing, surpassing $12.8 billion, reaching an all-time high. This growth reflects investors' confidence in the Solana ecosystem and the demand for on-chain liquidity support. The ample supply of stablecoins provides crucial liquidity support for on-chain financial activities on Solana, fostering the development of the on-chain ecosystem. This liquidity not only enhances on-chain transaction activity but also provides investors with more trading and investment opportunities.

Solana On-Chain Stablecoin Overview (Data Source: https://defillama.com/chain/solana)

Solana On-Chain DEX Trading Volume Growth

The decentralized exchange (DEX) on the Solana blockchain has seen a trading volume of over $3.5 billion in the past 24 hours, indicating a recovery in on-chain activity. The supply of stablecoins has also been steadily increasing, recently surpassing $18.2 billion. This reflects investors' confidence in the Solana ecosystem and provides more liquidity support for the on-chain transactions.

Solana On-Chain DEX Trading Volume (Data Source: https://defillama.com/chain/solana)

Solana Decentralization Policy

The Solana Foundation has introduced a new policy to enhance decentralization. For newly added validators in its delegation program, if certain validators have been eligible for Solana Foundation delegation on the mainnet for at least 18 months and have a stake outside of the foundation delegation of less than 1000 SOL, three of them will be removed. This policy aims to reduce reliance on the foundation delegation and encourage community-backed validators.

Institutional Company Entry Buy-In

Canadian publicly traded investment firm SOL Strategies issued a $5 billion convertible bond to purchase and stake SOL. Following the announcement by SOL Strategies, the firm's stock price rose by 23.5%. SOL Strategies intends to emulate Michael Saylor's MicroStrategy by continually issuing convertible corporate bonds to buy into BTC, with the goal of boosting its stock price. Therefore, if SOL Strategies' move is successful, it will provide significant support and bullish sentiment for SOL's price. Moreover, the recent emerging trend is that gradually traditional companies are also beginning to buy and hold SOL through various means.

Benefits of SOL Spot ETF News

The approval of SOL's spot ETF application has been continuously delayed, but with the appointment of the new SEC Chairman Paul Atkins, the situation may change. Paul Atkins has a friendly stance towards the crypto industry and has prioritized building a clear digital asset regulatory framework, which is good news for the approval of the SOL spot ETF and may further drive up the SOL price.

SNX: From Depegging Crisis to Recovery Hope, How Synthetix Is Rebuilding Market Confidence

Recently, the algorithmic stablecoin sUSD issued by Synthetix experienced a severe depegging event due to adjustments to Synthetix's debt management mechanism in SIP-420 proposal. The sUSD price plummeted to a low of $0.68, and Synthetix's token SNX also dropped to a low of $0.55. Synthetix's Total Value Locked (TVL) hit a low of $72.23 million. Market investors' confidence in Synthetix has been shaken.

Remedial Measures

· Liquidity Incentive: Synthetix is boosting the yield to 49.18% by staking sUSD/sUSDe LP on Convex to attract more liquidity.

· Deposit Incentive: Through the Infinex project, Synthetix incentivizes users to deposit sUSD, distributing 16,000 OP rewards weekly to users depositing over 1,000 sUSD, with the incentive program lasting for six weeks.

· Staking Incentive: Users are allowed to stake sUSD in the 420 pool, and by staking for one year, they can receive 5 million SNX as an incentive.

· Negative Incentive and Staking Optimization: Stakers are required to deposit a certain proportion of sUSD, and failure to meet the requirement will result in a pause in debt forgiveness, with a proportion increase upon anchor deviation. Additionally, SNX pool staking has been implemented to expand sUSD supply, introduce support for multiple collateral and off-chain order matching in Perps V4.

Market Reaction

Driven by these measures, the price of sUSD has rebounded to a high of $0.88, and the SNX price has also risen to $0.74. Furthermore, Synthetix's Total Value Locked (TVL) has increased from $72.23 million to $89.25 million, representing a 23.56% growth.

Subsequent Impact

While the anchoring issue of sUSD has not been fully resolved, Synthetix's proactive measures have brought hope of recovery to the market. If the sUSD price can recover to $1, investor confidence in Synthetix may be restored, thereby facilitating further price appreciation of SNX.

Synthetix TVL Overview (Source: https://defillama.com/protocol/synthetix#information)

Bearish Targets: REZ, OMNI

REZ: Underperformance of Restaking Background Triggers 8.64% Token Unlock or Institutional and Team Dump

Renzo is a liquidity restaking protocol based on the EigenLayer ecosystem, aiming to simplify complex re-collateralization mechanisms for end users and achieve rapid collaboration with EigenLayer node operators and Active Validation Services (AVS). Due to the recent poor performance of the Ethereum ecosystem and the prolonged bearish trend of ETH, the ETH staking rate has also experienced a decline, leading to a loss of market attention for the Restaking track project. On April 30, REZ will see the unlocking of 8.64 billion REZ tokens, accounting for 8.64% of the total locked amount, with only a 21% current circulation rate, and the linear unlocking chart disclosed in its whitepaper indicates that the primary recipients of this unlock are institutional investors and the project team. As the Restaking project currently has low popularity and participation, coupled with the poor performance of the Ethereum ecosystem, this significant unlock may trigger substantial sell-offs, thereby impacting the price of the REZ token.

OMNI: Large Token Unlock Approaching, Market Sell-Off Risk Intensifies

Omni is Ethereum's interoperability layer, establishing low-latency communication among all Ethereum Rollups, enabling Ethereum to operate as a cohesive system in the modular era. Omni is also a standalone public chain project. Due to the recent downturn in the Ethereum ecosystem and poor performance of various Layer-2 projects in this cycle, Omni, as the project linking various Layer-2 solutions, has lost its value. On May 2nd, OMNI will have 16.63 million OMNI tokens unlocked, accounting for 16.64% of the total locked amount, while the current circulating supply is only 19%, doubling the circulating token amount based on the existing circulation. Through the linear unlock schedule published in its whitepaper, it can be seen that this unlocking is mainly targeting institutional investors and the project team. Due to Omni's current lack of popularity, this large unlock may trigger significant sell-offs, thereby affecting the price of the OMNI token.

Market Sentiment Index Analysis

The market sentiment index has risen from 55% last week to 79%, entering the overall bullish range.

Hot Topic Track

MCP: Can It Lead the Future Development Direction of Crypto✖️AI

Current Status

MCP stands for Model Context Protocol and was launched by Anthropic on November 25, 2024. After its launch, it did not receive much market attention. Following Deepseek's impact on existing AI software, the market gradually began to focus on optimization algorithms and resource scheduling issues, changing the previous development approach of AI relying on accumulating computing power. As a result, MCP standardized the idea of how external data and applications interact with large language models (LLMs) and provide context, gradually gaining market attention.

Recently, with the MCP-related token Dark on Solana's chain performing well after its listing on Binance Alpha, investors in the market have shown an increased interest in and investment in MCP-related tokens, making MCP one of the few concentrated hot topic tracks in the short term.

Concept of MCP

The Model Context Protocol (MCP) is an open-source standard introduced by Anthropic, originally as an extension of the Claude ecosystem, aimed at addressing the fragmentation issue of AI model interactions with external tools and data. It has now evolved to MCP serving as a secure and standardized way for large language model-driven AI agents to interact with external systems to access real-time data. In practical use, MCP can act as a universal adapter, enabling AI to access content repositories, business tools, and development environments.

The core objective of MCP is to enhance efficiency through standardization, transitioning AI agents from "understanding" to "implementation," providing developers with efficient tools, and allowing businesses and non-technical users to easily customize their agents. This way, MCP can become a bridge connecting virtual intelligence with the real world, thereby driving personalized innovation and development across industries.

Working Principle and Technology of MCP

MCP Technology

The technical foundation of MCP is JSON-RPC 2.0, a lightweight and efficient communication standard that supports real-time bidirectional interaction, similar to high-performance WebSockets. It operates through a client-server architecture:

· MCP Host: The user-interfacing application, such as Claude Desktop, Cursor, or Windsurf, responsible for receiving requests and displaying results.

· MCP Client: Embedded within the host, establishes a one-to-one connection with the server, handles protocol communication, ensuring isolation and security.

· MCP Server: A lightweight program that provides specific functionality, connecting to local (e.g., desktop files) or remote (e.g., cloud-based API) data sources.

The transmission methods include:

· Stdio: Standard input-output, suitable for local rapid deployment, such as file management, with latency as low as milliseconds.

· HTTP SSE: HTTP Server-Sent Events, supporting remote real-time interaction, such as cloud-based API calls, suitable for distributed scenarios.

Working Principle

MCP adopts a client-server architecture, wherein the MCP host needs to communicate and collaborate through the MCP client and MCP server to retrieve data or perform operations. To ensure efficiency and security, MCP assigns a dedicated client to each server, forming one-to-one isolated connections. Its core components include:

· Host: User entry point, such as Claude Desktop, responsible for initiating requests and displaying results, serving as the interactive "facade".

· Client: Communication intermediary, interacting with the server using JSON-RPC 2.0, managing requests and responses to ensure isolation.

· Server: Function provider, connecting to external resources and performing tasks, such as reading files or calling APIs.

Various Flexible Transport Methods:

· Stdio: Local deployment, suitable for quick access to desktop files or local databases, with latency as low as milliseconds.

· HTTP SSE: Remote interaction, supporting cloud-based API calls, with strong real-time capabilities.

MCP Advantages

MCP addresses challenges in current AI applications through standardized interfaces:

· Real-time Access: AI can fetch the latest data in an extremely short time.

· Security and Control: Direct data access avoids intermediate storage, achieving up to 98% reliability in permission management; users can restrict AI to access specific files only.

· Low Compute Load: No need to embed vectors, reducing computing costs by approximately 70%.

· Flexibility and Scalability: Connection numbers decreased from the traditional 1 billion times to 20,000 times, significantly simplifying the configuration process.

· Interoperability: One MCP Server can be reused by multiple models.

· Vendor Flexibility: Switching LLM does not require infrastructure refactoring, similar to USB-C compatibility.

· Self-Agent Support: Supports AI dynamic access tools for executing complex tasks.

MCP Ecosystem Projects

Dark

Dark is an experimental MCP network based on Solana, focusing on Trusted Execution Environment (TEE). Through the automatic integration of new tools and on-chain interactions, Dark aims to innovate in decentralized technology. However, most of the project's features have not been launched yet and are currently in the concept speculation phase. It has its own token, DARK.

SkyAI

SkyAI is a native AI infrastructure based on the BNB Chain, offering cross-chain data access and AI agent deployment. The project is still at the conceptual stage, with no actual products launched yet. It has its own token, SKYAI, with a market capitalization of 43 million USD, making it the leading project in the MCP space.

Solix

Solix is a DePIN Network utilizing MCP, focusing on intelligent bandwidth sharing. Users can share bandwidth through a browser extension and receive rewards, covering 63 countries worldwide. The project has achieved rapid technical implementation but needs to validate user engagement and the sustainability of its economic model. The project is currently at a stage where no tokens have been issued.

HighKey

HighKey is a DeFAI project compatible with MCP and DARP protocols, focusing on DeFi arbitrage and advanced analytics. It has issued its token, HIGHKEY, with a relatively small market cap of only $5.68 million. The project's development features are clear, but there is still room for improvement in user experience and differentiation.

DeMCP

DeMCP is a decentralized MCP project focusing on trust and security, providing SSE proxy services. It has not issued any tokens at the current stage and is still in development, needing to demonstrate its actual product.

UnifAI

UnifAI is a DeFAI project offering on-chain and off-chain task execution capabilities. Its flagship product, UniQ, simplifies complex on-chain operations. Although no tokens have been issued yet, it has launched a reward points program.

Future Development Direction

Currently, Web3 AI projects based on the MCP protocol are mostly in the early stages of development, with no substantial products launched yet, although some have issued tokens. While the MCP protocol is currently a hot spot in the AI subfield, given the past failure of the AI Agent track, there is still a need for caution regarding whether MCP track projects are just a short-lived AI meme asset issuance or can truly develop products that drive the AI track forward. Therefore, the future development direction of MCP should mainly focus on the implementation and application of decentralized technology. With the rapid advancement of AI and blockchain technology, MCP will continue to optimize its technical architecture to support more efficient computation and data sharing. Additionally, MCP will strive to enhance interoperability, simplify the developer experience, and promote the widespread adoption of decentralized applications.

Market Theme Overview

Data Source: SoSoValue

Based on weekly return rate statistics, the AI track performed the best, while the Cefi track performed the worst.

AI Track: In the AI track, TAO, RENDER, FET, WLD, FARTCOIN have a relatively large market share, totaling 86.32%. Their respective weekly price changes are: 50.96%, 18.93%, 53.36%, 33.58%, 29.95%. The average price changes are higher than those of projects in other tracks, leading to the best performance in the AI track.

Cefi Track: In the Cefi track, BNB, BGB, OKB have a relatively large market share, totaling 89.97%. Their respective weekly price changes are: 2.35%, 2.51%, 2.29%. The average price changes are lower than those of projects in other tracks, resulting in the worst performance in the Cefi track.

Next Week's Major Crypto Events

Wednesday (April 30th): U.S. Q1 Actual GDP Annualized QoQ Revised, U.S. March Core PCE Price Index YoY, U.S. April ADP Employment Change

Thursday (May 1st): U.S. April ISM Manufacturing PMI

Friday (May 2nd): U.S. April Seasonally Adjusted Nonfarm Payrolls, U.S. April Unemployment Rate

Summary

This week, the cryptocurrency market witnessed a significant uptrend, shifting from a bearish sentiment to a positive one. This change was primarily influenced by the easing U.S. policies and the new SEC chairman's friendly stance towards the crypto industry. With the evolving policy environment, investor confidence in the market has been gradually restoring, leading to capital inflows into the crypto market and driving price hikes. However, the market still needs to be cautious of economic downturns and tariff policy uncertainties, which may continue to affect market trends. While investors enjoy market growth, they should remain cautious to cope with potential fluctuations.

Projects like Solana and Synthetix have shown potential for recovery, especially in terms of technological upgrades and community support. The rapid development of Solana and the innovative initiatives of Synthetix have attracted more investor attention, and these projects are expected to further expand their market influence by 2025. However, projects like Omni face selling pressure from token unlocks, which may have a negative impact on their prices. Investors should allocate their investment reasonably based on the specific circumstances of projects and market conditions to mitigate potential risks.

Although the overall industry trend is currently positive, the market still faces uncertainty due to the impending economic downturn and tariffs in the U.S. Therefore, this week's uptrend can only be seen as a rebound from oversold conditions in the previous period, and it does not necessarily indicate a market trend reversal. Next week will see the release of various macroeconomic data, including:

· US Q1 Actual GDP Annualized Rate Revision;

· US March Core PCE Price Index YoY;

· US April ADP Employment Change; US April ISM Manufacturing PMI;

· US April Seasonally Adjusted Nonfarm Payrolls; US April Unemployment Rate.

These data points can all impact future market trends. It is recommended that investors maintain a moderate position, practice risk management, and await clarification of policies, which will be the best strategy to deal with the current market.

This article is contributed content and does not represent the views of BlockBeats.