Grayscale Boosts Cardano Holdings Past 20% Amid ADA Price Slump

Grayscale has increased its Cardano (ADA) allocation by 20 percent as the network expands towards Bitcoin-based decentralized finance.

Highlights

• Grayscale raised ADA weighting to around 20.7% to 20.125 in its Smart Contract Fund from 19.50% using a series of small adjustments.
• This adjustment reinforces ADA’s position as the third-largest holding, behind Solana and Ethereum.
• Analysts view this move as Cardano’s expanding role in Bitcoin-based decentralized finance (DeFi).

This allocation follows as Cardano network activity remains below 2021 cycle highs.

Cardano Raises Cardano Allocation During Correction Phase

The leading crypto asset manager, Grayscale Investments, gradually increased Cardano’s share in its Smart Contract Fund, raising ADA’s allocation from 19.50 percent to just above 20 percent. The change was made step-by-step rather than in a large rebalance.

This adjustment makes Cardano the third-largest holding in the diversified fund, which includes Solana at 28.58% and Ethereum at 28.41%, alongside Hedera, Avalanche, and Sui.

Lifting Cardano Allocation Above 20 Percent

The Smart Contract Funds offer automated, secure, and transparent management of digital assets. It eliminates intermediaries and reduces fees, prevents fraud, and speeds up transactions. This contract provides diversified exposure to leading blockchain platforms competing in decentralized finance and application infrastructure.

Cardano’s allocation has increased approximately 20.7% and 20.12% based on the recent disclosures. This is acquired through continued exposure to ADA during periods of lower price performance. As per recent market performance, ADA prices plunged to near $0.26 – $0.28.

Grayscale has not provided an official explanation about the adjustment. Moreover, institutional allocation decisions are driven by fundamental conviction and long-term goals rather than reactions to market volatility.

Bitcoin DeFi Strategy Gains Traction

Market observers connected the increased allocation to Cardano to expanding Bitcoin-based decentralized finance. Investors may overlook ADA’s current price volatility as institutional positioning remains steady.

Cardano’s development wing, Input Output Global, had already demonstrated a live Bitcoin DeFi transaction at the Bitcoin 2025 Conference in Las Vegas. In this demonstration, developers executed an on-chain swap of Bitcoin for Cardano-based tokens, exhibiting cross-chain capabilities.

After the demonstration, the team introduced Cardinal, depicted as Cardano’s first Bitcoin DeFi protocol. The system enables users to bridge and stake BTC with Cardano’s extended UTXO model. It allows Bitcoin holders to access DeFi services without relinquishing custody of their assets.
As per analysts, positioning Cardano as a smart contract layer for Bitcoin could help differentiate it in a market largely dominated by Ethereum and Solana.

Allocation Amid Slower Network Activity

Grayscale’s allocation took place during a slowdown in on-chain activity compared to the peak in 2021. Only a few projects have launched on Cardano in recent years, and overall transactions have remained below prior highs.

Cardano’s expansion continues to include infrastructure upgrades, privacy-focused features, and expanded interoperability. However, its adoption rates and developer growth remain key factors for long-term competitiveness.

On the other hand, Coinbase has expanded its on-chain lending product via the Morpho protocol to include Cardano (ADA) as eligible collateral. Customers who are from the United States, excluding New York residents, can now borrow up to $100,000 in USDC against their ADA holdings.

Conclusion

Analysts link the weighting to Cardano’s Cardinal protocol, which allows users to bridge and stake Bitcoin (BTC) without giving up custody. Despite the institutional buy-ins, ADA is currently testing a critical support zone near $0.25-$0.27. If Bitcoin DeFi gains traction, Cardano could get a new narrative. However, the execution and adoption will determine whether this will attract higher and sustained capital inflows.