Avalanche’s stablecoin supply has skyrocketed 70% in the past year, reaching $2.5 billion. However, this influx of liquidity has not translated into demand for AVAX, which has lost nearly 60% of its value. Analysts suggest that passive investor behaviour and macroeconomic factors are keeping Avalanche’s DeFi ecosystem stagnant.
Stablecoin Boom, AVAX Bust
The Avalanche network has seen its stablecoin supply rise from $1.5 billion in March 2024 to $2.5 billion by March 2025, indicating strong capital inflows. Stablecoins are often seen as a sign of potential buying pressure, acting as a bridge between traditional finance and crypto markets.
Market capitalization of stablecoins on Avalanche. Source: Avalanche
Despite this, AVAX continues to struggle, trading above $19 as of March 31, 2025. The decline suggests that these stablecoin inflows are not being actively deployed into Avalanche’s DeFi ecosystem—a crucial factor for AVAX’s price growth.
Why AVAX Isn’t Benefiting from Stablecoin Growth
According to Juan Pellicer, a senior research analyst at IntoTheBlock, a substantial portion of Avalanche’s new stablecoin liquidity consists of bridged Tether, which remains idle rather than being used in DeFi activities like lending, swapping, or collateralisation.
“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,” Pellicer told Cointelegraph.
Macroeconomic Uncertainty Weighs on AVAX and Crypto
AVAX’s price decline is part of a broader crypto market downturn, with investor sentiment dampened by global uncertainty. The market is particularly watching US President Donald Trump’s upcoming import tariff announcement on April 2, aimed at reducing the $1.2 trillion trade deficit.
The uncertainty surrounding these tariffs has also kept BTC and US equity markets under pressure, as major indices struggle to break above their 200-day moving averages.
Crypto Market Bottom Expected by June
Despite the current weakness, Nansen analysts predict a 70% chance that the crypto market will bottom out by June. The ongoing tariff negotiations are seen as a key factor, with a clearer market outlook expected once major uncertainties subside.
BTC/USD, 1-day chart. Source: Nansen
“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,” said Aurelie Barthere, principal research analyst at Nansen.
