- Cardano plans to convert part of its $1.2 billion treasury into Bitcoin and use the yield to buy back ADA
- Can the market absorb the initial sell-side shock?
Choppy price action, thinning liquidity, and a slow fade in conviction. Despite Charles Hoskinson’s ongoing optimism, that’s pretty much where Cardano [ADA] stands right now.
However, behind the scenes, things are starting to shift. In a recent interview, Charles Hoskinson confirmed Cardano’s new treasury strategy.
According to AMBCrypto, it’s a smart move on paper, one that could support ADA’s long-term price. Still, it’s not without risk, putting ADA’s already sluggish run to the ultimate test.
Cardano’s $1.2 billion pivot towards Bitcoin
Beyond institutions, corporates, and sovereign entities, Bitcoin is now being recognized as a store of value by an unexpected source, another Layer-1 blockchain. The catalyst? Its ability to generate reliable yield.
In fact, Charles Hoskinson has now laid out a plan that could reshape how Cardano runs its treasury. The idea is to use part of the $1.2 billion in ADA reserves to buy Bitcoin, then use the yield from that BTC to buy back ADA.
Source: Messari
In short, it’s a simple feedback loop, designed to gradually reduce supply and support price appreciation along the way. Consider this – With its treasury, Cardano could acquire approximately 11,320 BTC at the press time spot price of $106,000.
Should Bitcoin reclaim the $110,000-level, that position would generate unrealized gains of around $40 million. If redirected into ADA buybacks, Cardano could buy approximately 66.67 million ADA at a spot price of $0.60.
Consequently, this will reduce supply while reinforcing price support. Though yet to be implemented, it sure is a high-conviction strategy that could shape ADA’s long-term value trajectory.
Can the market absorb the initial shock?
As flagged by AMBCrypto, Cardano’s $0.60 support zone has been structurally fragile, with large holders showing signs of retreat. Plus, its ADA/BTC pair retraced to its pre-election lows – A sign of weakening relative momentum.
Meanwhile, Futures order books revealed a lack of aggressive bids, keeping speculative liquidity thin and reducing short-term upside pressure.
Taken together, Cardano seemed to be trapped in a pump-and-dump loop at press time. One where smart money hasn’t been buying the dip, but may be selling into strength.
The result? ADA has already posted two lower lows this month, increasing the probability of a deeper correction ahead.
Source: TradingView (ADA/USDT)
In this kind of volatile setup, even a modest wave of selling could spark broader panic, particularly among retail participants.
So, unless smart money starts scooping up a meaningful chunk of ADA’s supply, this treasury strategy is going to look like a bold but risky bet in the short run.
Still, the proposal marks a paradigm shift. Instead of relying on the usual DeFi staking rewards, Cardano’s aiming for real yield. If it works, it could set a new standard. Not just for ADA, but for how Layer-1s manage long-term value.
