Grayscale Increases ADA Exposure Amid Bitcoin DeFi Push

Grayscale has raised its Cardano allocation above 20 percent as the network expands its push into Bitcoin based decentralized finance.

Key Takeaways

• Grayscale increased ADA’s weighting to around 20.07 percent to 20.12 percent in its Smart Contract Fund from 19.50 percent through a series of small adjustments.
• Cardano is now the fund’s third largest holding, behind Solana and Ethereum.
• Analysts link the move to Cardano’s growing focus on Bitcoin DeFi, though no official confirmation has been provided.
• The allocation increase comes even as Cardano network activity remains below 2021 cycle highs.

What Happened?

Grayscale Investments has steadily increased Cardano’s share in its Smart Contract Fund, lifting ADA’s allocation from 19.50 percent to just above 20 percent, according to publicly disclosed portfolio data. The change reflects consecutive incremental increases rather than a single large rebalance.

The adjustment places Cardano as the third largest holding in the diversified fund, which includes Solana at 28.58 percent and Ethereum at 28.41 percent, alongside Hedera, Avalanche, and Sui.

Grayscale Lifts Cardano Allocation Above 20 Percent

The Smart Contract Fund is designed to provide diversified exposure to leading blockchain platforms competing in decentralized finance and application infrastructure. Because of that, even modest changes in asset weighting are closely monitored by institutional and retail investors.

Cardano’s allocation has now climbed to approximately 20.07 percent to 20.12 percent based on recent disclosures. While the increase may appear small in percentage terms, it signals continued institutional exposure to ADA during a period of subdued price performance. ADA has recently traded near $0.28 and remains well below previous cycle highs.

Importantly, Grayscale has not provided an official explanation for the adjustment. Institutional allocation decisions typically reflect broader portfolio strategy rather than short term price swings.

Bitcoin DeFi Strategy Gains Attention

Market observers and crypto analyst Zach Humphries have linked the increased allocation to Cardano’s expanding efforts in Bitcoin based decentralized finance. Humphries noted that many investors may be overlooking ADA amid recent volatility, while institutional positioning appears steady.

Cardano’s development arm, Input Output Global, previously demonstrated a live Bitcoin DeFi transaction at the Bitcoin 2025 Conference in Las Vegas. Developers executed an on chain swap of Bitcoin for Cardano based tokens, showcasing cross chain capabilities.

Following that demonstration, the team introduced Cardinal, described as Cardano’s first Bitcoin DeFi protocol. The system enables users to bridge and stake BTC within Cardano’s extended UTXO model. The approach is designed to allow Bitcoin holders to access DeFi services without relinquishing custody of their assets.

According to Humphries, even limited adoption of Bitcoin driven liquidity could channel measurable capital into the Cardano ecosystem. He argued that positioning Cardano as a smart contract layer for Bitcoin could help differentiate it in a market largely dominated by Ethereum and Solana.

However, it is important to note that no direct confirmation links Grayscale’s allocation shift to these Bitcoin DeFi initiatives.

Institutional Positioning Amid Slower Network Activity

The allocation increase stands in contrast to a broader slowdown in on chain activity compared with peak levels during the 2021 market cycle. Fewer new projects have launched on Cardano in recent years, and transaction volumes have remained below prior highs.

Periods of consolidation are not unusual in blockchain ecosystems. Cardano’s roadmap continues to include infrastructure upgrades, privacy focused features, and expanded interoperability. Still, adoption rates and developer growth remain key metrics for long term competitiveness.

In parallel, Coinbase has expanded its on chain lending product via the Morpho protocol to include ADA as eligible collateral. Qualified United States customers, excluding New York residents, can now borrow up to $100,000 in USDC against their ADA holdings. The lending platform has already processed more than $1.9 billion in loan originations across supported assets.

Together, these developments add additional utility and institutional relevance to the Cardano ecosystem.

CoinLaw’s Takeaway

In my experience, small allocation increases from major asset managers often matter more than headline grabbing moves. I found this gradual climb above 20 percent especially interesting because it happened during a quieter phase for Cardano’s on chain metrics. That tells me institutional players may be looking beyond short term activity and focusing on structural positioning.

If Bitcoin DeFi truly gains traction, Cardano could carve out a unique narrative. But execution and adoption will ultimately determine whether this strategy translates into sustained capital inflows. For now, Grayscale’s move sends a clear signal that ADA remains firmly on the institutional radar.

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