Avalanche saw a significant surge in stablecoin supply over the past year, but the onchain deployment of this capital points to passive investor behavior, which may be limiting demand for the network’s utility token.

The stablecoin supply on the Avalanche network rose by over 70% over the past year, from $1.5 billion in March 2024, to over $2.5 billion as of March 31, 2025, according to Avalanche’s X pos

Market capitalization of stablecoins on Avalanche. Source: Avalanche

Stablecoins are the main bridge between the fiat and crypto world and increasing stablecoin supply is often seen as a signal for incoming buying pressure and growing investor appetite.

However, Avalanche’s (AVAX) token has been in a downtrend, dropping nearly 60% over the past year to trade above $19 as of 12:31 pm UTC, despite the $1 billion increase in stablecoin supply, Cointelegraph Markets Pro data shows.

AVAX/USD,1-year chart. Source: Cointelegraph Markets Pro

“The apparent contradiction between surging stablecoin value on Avalanche and AVAX’s significant price decline likely stems from how that stablecoin liquidity is being held,” according to Juan Pellicer, senior research analyst at IntoTheBlock crypto intelligence platform.

Related: Bitcoin can hit $250K in 2025 if Fed shifts to QE: Arthur Hayes

A “substantial portion” of these inflows consists of bridged Tether (USDT), the research analyst told Cointelegraph, adding:

“This seems as inactive treasury holdings rather than capital actively deployed within Avalanche’s DeFi ecosystem (at least for the time being). If these stablecoins aren’t being used in lending, swapping, or other DeFi activities that would typically drive demand for AVAX (for gas, collateral, etc.), their presence alone wouldn’t necessarily boost the AVAX price”

The AVAX token’s downtrend comes during a wider crypto market correction, as investor sentiment is pressured by global uncertainty ahead of US President Donald Trump’s reciprocal import tariff announcement on April 2, a measure aimed at reducing the country’s estimated trade deficit of $1.2 trillion.

Related: Michael Saylor’s Strategy buys Bitcoin dip with $1.9B purchase

70% chance for crypto market to bottom by June: Nansen analysts

Nansen analysts predict a 70% chance that the crypto market will bottom in the next two months leading into June as the ongoing tariff-related negotiations progress and investor concerns are alleviated.

“Once the toughest part of the negotiation is behind us, we see a cleaner opportunity for crypto and risk assets to finally mark a bottom,” Aurelie Barthere, principal research analyst at the Nansen crypto intelligence platform, told Cointelegraph.

Both traditional and cryptocurrency markets continue to lack upside momentum ahead of the US tariff announcement.

BTC/USD, 1-day chart. Source: Nansen

“For the main US equity indexes and for BTC, the respective price charts failed to resurface above their 200-day moving averages significantly, while lower-lookback price moving averages are falling,” wrote Nansen in an April 1 research report. 

Magazine: Bitcoin ATH sooner than expected? XRP may drop 40%, and more: Hodler’s Digest, March 23 – 29