- Avalanche‘s stablecoin supply increased by over 70% in the past year, growing from $1.5 billion to more than $2.5 billion.
- Despite this liquidity growth, AVAX token price fell nearly 60% during the same period, trading above $19 as of April 2025.
- Analysts attribute this contradiction to passive holding patterns rather than active DeFi engagement on the network.
Avalanche’s network saw its stablecoin supply surge by more than 70% over the past year, expanding from $1.5 billion to over $2.5 billion by March 31, 2025, according to the company’s official announcement on X (formerly Twitter). However, this significant increase in stablecoin liquidity has not translated to positive price action for the network’s native AVAX token.
The AVAX token has declined nearly 60% during the same period, trading above $19 as of 12:31 pm UTC, according to Cointelegraph Markets Pro data. This divergence between growing stablecoin presence and falling token price has raised questions about capital usage within the ecosystem.
Juan Pellicer, senior research analyst at IntoTheBlock crypto intelligence platform, explained the apparent contradiction to Cointelegraph: "This seems as inactive treasury holdings rather than capital actively deployed within Avalanche’s DeFi ecosystem (at least for the time being)." He noted that a "substantial portion" of these inflows consists of bridged Tether (USDT).
Stablecoins typically function as bridges between traditional finance and the cryptocurrency ecosystem, with increasing supply often signaling growing investor interest. However, Pellicer suggests these funds appear dormant rather than engaged in lending, swapping or other DeFi activities that would drive AVAX demand for gas fees or collateral.
Market Uncertainty Ahead of Tariff Announcements
The AVAX price decline coincides with broader market correction as investors show caution ahead of US President Donald Trump‘s reciprocal import tariff announcement on April 2. The measure aims to address the country’s estimated $1.2 trillion trade deficit.
Nansen analysts predict a 70% probability that the crypto market will reach a bottom within the next two months as tariff-related negotiations progress. Aurelie Barthere, principal research analyst at Nansen, told Cointelegraph: "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."
Technical Indicators Remain Bearish
According to Nansen’s April 1 research report, both major US equity indexes and Bitcoin Price charts have failed to maintain positions above their 200-day moving averages, while shorter-term moving averages continue to decline.
This technical weakness reflects the cautious investor sentiment currently affecting both traditional markets and cryptocurrencies as market participants await clarity on international trade policies and their potential economic impacts.
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