Avalanche (AVAX) Experienced a Notable Stablecoin Supply Surge, But Passive On-chain Use May Be Limiting Demand

As per the post from the Avalanche, the supply has increased by over 70% in the past year, rising from $1.5 billion in March 2024 to more than $2.5 billion as of March 31, 2025.

Avalanche (AVAX) has experienced a significant surge in stablecoin supply over the past year, but passive on-chain use may be limiting demand for its utility token.

As per the post from the Avalanche, the stablecoin supply has increased by over 70% in the past year, rising from $1.5 billion in March 2024 to more than $2.5 billion as of March 31, 2025.

Stablecoins are essential in the crypto space as they serve as a link between traditional (fiat) and digital currencies, which can indicate heightened buying activity and investor trust.

However, senior research analyst at IntoTheBlock, Juan Pellicer, further notes that the issue is how the stablecoin liquidity is being utilized. A large portion of the increment comes from bridged Tether (USDT), but rather than being actively employed in DeFi for lending or trading, a significant amount remains dormant in treasury holdings.

Despite a $1 billion increase in stablecoin supply, Avalanche’s AVAX token has decreased by nearly 60% over the past year. The price has recovered to reach highs of around $55.70, and it is currently trading above $19.

AVAX’s price decline follows the broader crypto market downturn, which is being driven by investor uncertainty. A key factor is former U.S. President Donald Trump’s upcoming April 2 announcement on new import tariffs aimed at reducing the $1.2 trillion trade deficit. These tariffs have unsettled markets, impacting riskier assets like cryptocurrencies.

Nansen analysts place the odds at 70% that the crypto market will hit bottom in the next two months as tariff negotiations continue and investor anxiety subsides.

Both the traditional and crypto markets are still weak in anticipation of the U.S. tariff announcement.

In a report released on April 1, Nansen observed that BTC and key U.S. stock indexes have been unable to break through their 200-day moving averages, while shorter-term moving averages are still decreasing.