Avalanche’s stablecoin supply has soared by 70% over the past year, hitting $2.5 billion. However, despite this liquidity boost, AVAX has lost nearly 60% of its value, currently trading at around $19. The disconnect between rising stablecoin inflows and AVAX’s decline suggests that capital remains largely inactive in the DeFi ecosystem.

Why More Stablecoins Don’t Mean Higher AVAX Demand

Stablecoins typically signal growing investor appetite, acting as a bridge between fiat and crypto markets. However, the new liquidity on Avalanche has not translated into DeFi activity.

According to Juan Pellicer, senior analyst at IntoTheBlock, much of the stablecoin growth comes from bridged Tether (USDT), which appears to be sitting idle in treasury holdings rather than fueling lending, swapping, or other DeFi applications that require AVAX for fees and collateral.

AVAX Price Slumps Despite Crypto Market Optimism

AVAX’s decline is part of a wider crypto market downturn, fueled by global economic concerns. Investors are cautious ahead of US President Donald Trump’s import tariff announcement on April 2, a policy aimed at addressing the $1.2 trillion trade deficit.

Despite the price drop, analysts believe a market bottom could form by June. Aurelie Barthere, principal analyst at Nansen, suggests that once the tariff negotiations settle, crypto and risk assets could recover.

Crypto Market Bottom Could Arrive by June

Nansen analysts assign a 70% probability that the crypto market will bottom within the next two months. Both traditional and crypto markets lack upside momentum, with Bitcoin and US equity indexes struggling to regain their 200-day moving averages.

“For now, the toughest part of the tariff negotiations is creating uncertainty,” Barthere noted. “Once resolved, we expect a clearer opportunity for recovery.”