Grayscale Increases Cardano Allocation, Sees 'Bitcoin DeFi' as Key to Rebound

▲ Cardano (ADA) / AI-generated image

Grayscale, the world’s largest digital asset manager, has increased its allocation to Cardano (ADA), signaling a strategic move to capture the Bitcoin (BTC)-based decentralized finance (DeFi) market.

According to crypto media outlet The Crypto Basic on February 20 (local time), Grayscale raised Cardano’s weight in its Smart Contract Platform Fund from 19.50% to 20.07%. Crypto analyst Zach Humphries explained that this portfolio rebalancing is closely tied to Cardano’s Bitcoin DeFi strategy, noting that many investors may be underestimating Cardano’s long-term growth potential amid recent market volatility.

Humphries stated that Cardano’s efforts to leverage Bitcoin liquidity could create a clear differentiation in the smart contract market currently dominated by Ethereum (ETH) and Solana (SOL). Cardano is pursuing a strategy that enables Bitcoin holders to access various financial services within the Cardano ecosystem without relinquishing custody of their assets, utilizing a non-custodial collateral model and a stablecoin-based credit system. If realized, this scenario could drive significant Bitcoin capital into the Cardano network, sharply increasing the ecosystem’s overall value.

Institutional interest is also rising. Grayscale’s increased allocation is interpreted as a reflection of institutions’ positive assessment of Cardano’s technical reliability. The fund is currently led by Solana at 28.58% and Ethereum at 28.41%, followed by Cardano at 20.07%, Hedera at 8.40%, Avalanche at 7.67%, and Sui at 6.87%. If Cardano establishes itself as a core layer for Bitcoin DeFi, it is expected to effectively capture growing institutional demand for portfolio diversification.

Input Output Global (IOG), Cardano’s development company, has already demonstrated technical achievements. At the Bitcoin 2025 conference, IOG successfully showcased an on-chain swap between Bitcoin and a Cardano-based Minswap token, drawing significant attention. The company also launched “Cardinal,” Cardano’s first Bitcoin DeFi protocol, enabling users to directly bridge Bitcoin and stake it within an unspent transaction output (UTXO) model environment, positioning itself as a leader in cross-chain finance.

Ultimately, Grayscale’s increased bet reflects expectations that Cardano will evolve into a major hub absorbing Bitcoin liquidity. Humphries emphasized that Bitcoin DeFi will become Cardano’s defining narrative, adding that Cardano stands to benefit the most when the market re-evaluates the value of Bitcoin-based financial services. Investors are viewing Grayscale’s portfolio adjustment as a significant signal while closely monitoring technological advancements and capital inflows within the Cardano ecosystem.

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