Source: Cointelegraph Original: "{title}"

In the past year, the supply of stablecoins on the Avalanche network has significantly increased, but the on-chain deployment of these funds shows passive behavior from investors, which may limit the demand for the network's utility token.

According to data from Avalanche on the X platform, the supply of stablecoins on the Avalanche network grew from $1.5 billion in March 2024 to over $2.5 billion by March 31, 2025, representing an increase of over 70%.

Market capitalization of stablecoins on Avalanche. Source: Avalanche

Stablecoins serve as a primary bridge between fiat currency and the cryptocurrency world, and an increase in stablecoin supply is typically seen as a signal of buying pressure and growing investor demand.

However, despite the $1 billion increase in stablecoin supply, the Avalanche (AVAX) token is on a downward trend. According to Cointelegraph Markets Pro data, AVAX has dropped nearly 60% over the past year, trading at over $19 as of 12:31 UTC.

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

"The apparent contradiction between the surge in stablecoin value on Avalanche and the significant drop in AVAX price may stem from the way this stablecoin liquidity is held," said Juan Pellicer, a senior research analyst at the IntoTheBlock crypto intelligence platform.

In an interview with Cointelegraph, he stated, "The 'majority' of these inflows are bridged Tether (USDT), which appears to be inactive treasury holdings rather than actively deployed in Avalanche's DeFi ecosystem (at least for now). If these stablecoins are not used for lending, exchanging, or other DeFi activities, which typically drive demand for AVAX (e.g., for paying gas fees, collateral, etc.), their mere existence will not necessarily push AVAX prices up."

The downward trend of the AVAX token occurs amid a broader correction in the crypto market, with investor sentiment pressured by global uncertainties, especially ahead of U.S. President Donald Trump's announcement on April 2 to implement reciprocal import tariffs aimed at reducing the U.S. trade deficit of approximately $1.2 trillion.

Nansen analysts predict a 70% chance that the crypto market will hit bottom before June.

Nansen analysts predict a 70% probability that the crypto market will bottom out in the next two months, expecting market sentiment to improve as tariff-related negotiations progress and investor concerns ease.

Aurelie Barthere, chief research analyst at the Nansen crypto intelligence platform, told Cointelegraph, "Once the toughest part of the negotiations is over, we believe that crypto and risk assets will have a clearer opportunity to find a bottom."

Before the announcement of U.S. tariffs, both traditional and crypto markets lacked upward momentum.

BTC/USD daily chart. Source: Nansen

Nansen wrote in a research report on April 1, "For major U.S. stock indices and Bitcoin (BTC), their price charts have failed to significantly break above the 200-day moving average, while shorter-term price moving averages are trending downward."

Related: Ethereum price may have bottomed, but professional traders show low interest in buying Ethereum.

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