Source: Cointelegraph Original: "{title}"
Despite a surge in stablecoin supply by $30 billion to a new record level, cryptocurrency investors remain cautious as they await market stability amid ongoing tariff concerns.
According to a new report from the crypto intelligence platform IntoTheBlock, the total supply of stablecoins grew by over $30 billion in the first quarter of 2025, while the overall market capitalization of cryptocurrencies declined by 19%.
"As macro expectations quickly shifted from 'golden age' optimism to pessimism due to tariffs, the correlation between stocks and cryptocurrencies has increased," IntoTheBlock wrote in its quarterly report shared with Cointelegraph.
Source: ITB Capital Markets
The growth in stablecoin supply reflects a "cautious stance, with investors holding stablecoins as a hedge, possibly waiting for market stability or a better entry point," said Juan Pellicer, senior research analyst at the crypto intelligence platform IntoTheBlock.
Industry leaders predict that by 2025, the supply of stablecoins could exceed $1 trillion, potentially becoming a significant catalyst for the crypto market.
"We are in an upward trend of stablecoin adoption, which could see a substantial increase this year," David Pakman from CoinFund stated during the Chainreaction live show on Cointelegraph on March 27. "We could see stablecoins grow from $225 billion to $1 trillion this year."
The supply of stablecoins surpassed the historical high of $219 billion on March 15. Analysts believe that the growth in stablecoin supply is a signal of the continuation of the bull market cycle.
In the first quarter of this year, the stablecoin transaction volume on the Ethereum network exceeded $3 trillion on the mainnet, excluding layer two networks.
The number of unique addresses using stablecoins on the Ethereum mainnet also recorded over 200,000 for the first time in March.
Ethereum mainnet stablecoin daily active addresses. Source: IntoTheBlock
Despite the increasing blockchain activity, the price of Ether (ETH) fell by over 45% in the first quarter of 2025, according to Cointelegraph Markets Pro data.
ETH/USD 1-year chart. Source: Cointelegraph Markets
The decline in ETH is related to broader macroeconomic concerns and Ethereum-specific pressures, such as increased competition from networks like Solana and the rise of layer two protocols.
"Some analysts believe that layer two solutions dilute the value of ETH by shifting activity away from the main chain, but this overlooks that layer two still relies on Ethereum for security and fee payments, thus contributing to its ecosystem," Pellicer stated.
He added that the decline in ETH is more likely due to market sentiment and uncertainty about whether Ethereum can extract value from its extensive ecosystem.
However, other analysts believe there is a glimmer of hope regarding investor concerns related to tariffs. Nansen analysts predict that as tariff negotiations progress, there is a 70% chance that the crypto market will hit bottom by June 2025.
Related: Nansen: The probability of the crypto market hitting bottom before June due to trade concerns is 70%
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