Stablecoin Supply Hits Record High as Crypto Investors Brace for Tariff Impact

As fears of U.S. tariffs loom, cryptocurrency investors are showing caution despite a significant increase in stablecoin supply.

In the first quarter of 2025, stablecoin supply surged by over $30 billion, hitting record levels, while the overall crypto market capitalization dropped by 19%, according to a report from IntoTheBlock.

The growing correlation between crypto and traditional stocks reflects shifting market sentiment from optimism to tariff-driven concerns. Many investors are holding stablecoins as a hedge, waiting for market stability. Juan Pellicer from IntoTheBlock noted that the rising stablecoin supply shows a cautious stance among investors, looking for safer entry points.

Industry experts predict that stablecoin adoption could surge in 2025, potentially pushing the supply past $1 trillion. David Pakman from CoinFund recently noted that stablecoin adoption is on the rise, with projections reaching up to $1 trillion this year. The stablecoin supply hit a record $219 billion on March 15, hinting at continued bullish momentum.

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Ethereum’s network saw a notable increase in stablecoin transactions, moving over $3 trillion on the mainnet in Q1 2025, with unique active addresses surpassing 200,000. Despite this, Ether’s (ETH) price fell by over 45%, impacted by macroeconomic issues and competition from networks like Solana and layer-2 protocols.

Some analysts suggest that layer-2 solutions might dilute Ethereum’s value, but they still contribute to its ecosystem through security and fees. The drop in ETH is seen as more related to market sentiment than fundamental flaws.

Despite the challenges, some analysts remain optimistic. Nansen predicts a 70% chance of the crypto market bottoming out by June 2025 as tariff negotiations progress, hinting at a potential recovery.

Alexander Stefanov