Stablecoin supply on Avalanche grows to $2.5 billion, but AVAX lacks momentum from DeFi

Avalanche has seen a sharp increase in the supply of stablecoins over the past year, but the deployment of this inflow on-chain demonstrates passive investment behavior, which could limit demand for the network's utility token.

According to data from account X of Avalanche, the supply of stablecoins on this network has increased by over 70% in one year, from 1.5 billion USD in March 2024 to over 2.5 billion USD as of March 31, 2025.

! Stablecoin Market Cap on Avalanche | Source: AvalancheStablecoin is an important bridge between traditional finance and cryptocurrencies. The increased supply of stablecoins is often seen as a signal of increased buying pressure and growing demand for investment.

However, the price of AVAX is still on a downward trend, plummeting nearly 60% over the past year and currently trading around 19 USD, despite the addition of 1 billion USD in stablecoins on the network.

AVAX/USD 1-Year Chart | Source: TradingViewThe stark contrast between the soaring stablecoin supply on Avalanche and the declining price of AVAX may stem from how this stablecoin flow is being held, according to Juan Pellicer, senior analyst at the data platform IntoTheBlock.

According to him, a "significant part" of this cash flow is the amount of USDT transferred to Avalanche through the bridge. He added:

"It seems that these are more like passive reserves rather than actively deployed capital in the DeFi ecosystem of Avalanche ( at least at this moment ). If stablecoins are not used in activities such as lending, swapping, or other DeFi applications – things that could drive the demand for AVAX to pay gas fees or serve as collateral – then their presence may not necessarily drive the price of AVAX up."

AVAX's downtrend comes amid a correction in the entire crypto market as investor sentiment is affected by global uncertainties, especially ahead of US President Donald Trump's announcement of reciprocal import tariffs on April 2. The policy aims to narrow the U.S. trade deficit, currently estimated at $1.2 trillion.

70% chance the crypto market will hit bottom before June

Nansen analysts predict the crypto market has a 70% chance of bottoming out in the next two months, as negotiations regarding tariffs gradually fade and investor sentiment improves.

"Once the most difficult stage of the negotiation process is over, we see that the crypto market and risky assets have the opportunity to establish a bottom," said Aurelie Barthere, an analyst at Nansen.

Both traditional stock and crypto markets are still lacking recovery momentum ahead of the U.S. tax announcement.

BTC/USD chart in one day | Source: Nansen "The major stock indices in the U.S. as well as Bitcoin have yet to break clearly above the 200-day moving average, while the short-term moving averages are trending down," according to the report on April 1 from Nansen.

Disclaimer: This article is for informational purposes only and is not investment advice. Investors should conduct their own research before making decisions. We are not responsible for your investment decisions.

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Justin

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