Avalanche (AVAX) Token Price Drops 60% Despite Surge in Stablecoin Supply

Avalanche saw a significant surge in stablecoin supply over the past year, but the onchain deployment of this capital points to passive investor behavior

Avalanche saw a significant surge in stablecoin supply over the past year, but the onchain deployment of this capital points to passive investor behavior, which may be limiting demand for the network’s utility token.

The stablecoin supply on the Avalanche network rose by over 70% over the past year, according to Avalanche’s X post on March 31.

Stablecoin market capitalization on Avalanche. (Credit: Avalanche)

Stablecoins are the main bridge between the fiat and crypto world and increasing stablecoin supply is often seen as a signal for incoming buying pressure and growing investor appetite.

However, Avalanche’s (AVAX) token has seen limited demand this year, with its price dropping nearly 60% over the past year to trade above $19 as of 12:31 pm UTC, despite the $1 billion increase in stablecoin supply, according to Cointelegraph Markets Pro data.

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

“The apparent contradiction between surging stablecoin value on Avalanche and AVAX's significant price decline likely stems from how that stablecoin liquidity is being held,” said Juan Pellicer, senior research analyst at IntoTheBlock crypto intelligence platform.

A “substantial portion” of these inflows consists of bridged Tether (USDT), the research analyst told Cointelegraph, adding:

The AVAX token’s downtrend comes during a wider crypto market correction, as investor sentiment is pressured by global uncertainty ahead of US President Donald Trump’s reciprocal import tariff announcement on April 2, a measure aimed at reducing the country’s estimated trade deficit of $1.2 trillion.

70% chance for crypto market to bottom by June: Nansen analysts

Nansen analysts predict a 70% chance that the crypto market will bottom in the next two months leading into June as the ongoing tariff-related negotiations progress and investor concerns are alleviated.

“Once the toughest part of the stitching 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 the Nansen crypto intelligence platform.

Both traditional and cryptocurrency markets continue to lack upside momentum ahead of the US tariff announcement.

BTC/USD, 1-day chart. Source: Nansen

“For the main US equity indexes and for BTC, the respective price charts failed to resurface above their 200-day moving averages significantly, while lower-lookback price moving averages are falling,” wrote Nansen in an April 1 research report.