Avalanche stablecoin supply rises by 70%
The Avalanche (CRYPTO:AVAX) network experienced a 70% increase in stablecoin supply over the past year, growing from $1.5 billion in March 2024 to $2.5 billion as of March 2025.
Despite this liquidity surge, demand for Avalanche's native token, AVAX, remains subdued due to limited deployment of stablecoins in decentralised finance (DeFi) activities.
Stablecoins are typically seen as a bridge between fiat and crypto markets, often signaling potential buying pressure.
However, AVAX has lost nearly 60% of its value over the past year, trading at approximately $19.
Analysts attribute this decline to passive investor behavior, with a substantial portion of stablecoin inflows consisting of bridged Tether (CRYPTO:USDT).
These funds appear to be held as inactive treasury reserves rather than actively utilised in lending, swapping, or staking within Avalanche’s DeFi ecosystem.
Juan Pellicer, senior research analyst at IntoTheBlock, noted that the lack of active engagement with these stablecoins limits their impact on AVAX's price.
“If these stablecoins aren't being used in DeFi activities that drive demand for AVAX as gas or collateral, their presence alone won't necessarily boost the token's value,” Pellicer explained.
The broader crypto market also faces challenges amid global economic uncertainty tied to U.S. tariff negotiations.
Investor sentiment remains cautious ahead of President Donald Trump’s announcement of reciprocal import tariffs aimed at reducing the country’s $1.2 trillion trade deficit.
Nansen analysts predict a 70% chance for the crypto market to find its bottom by June 2025 as tariff-related concerns ease.
Aurelie Barthere, principal research analyst at Nansen, stated that resolving trade negotiations could provide clarity for risk assets, including cryptocurrencies.
Avalanche’s situation highlights a paradox: while the network benefits from increased liquidity via stablecoins, the lack of active deployment limits AVAX's growth potential.
Analysts suggest that for Avalanche to capitalise on its liquidity surge, it must foster greater integration of stablecoins into its DeFi ecosystem to generate meaningful demand for its native token.
At the time of reporting, the Avalanche (AVAX) price was $18.55.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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