Grayscale Investments has increased Cardano's (ADA) weighting in its Smart Contract Fund to over 20%, solidifying its position as the fund's third-largest holding behind Solana (SOL) and Ethereum (ETH). According to the latest fund data, ADA's allocation rose to 20.12% from 19.50%, marking a series of consecutive small adjustments rather than a single large rebalance.
This institutional move comes despite Cardano's muted network growth and subdued price performance, with ADA recently trading near $0.28, well below its previous cycle highs. Analysts interpret the incremental increase as a signal of sustained institutional confidence in Cardano's long-term prospects, even as retail sentiment remains bearish. Zach Humphries noted that Cardano's growing initiatives in Bitcoin-based DeFi, such as the Cardinal protocol, could be attracting institutional interest by positioning ADA as a smart contract layer for Bitcoin liquidity.
The allocation rise occurs within a broader context of Cardano's ecosystem developments. Coinbase has made ADA eligible for on-chain lending via the Morpho protocol, allowing U.S. customers (excluding New York) to borrow up to $100,000 in USDC against their ADA holdings. This platform has processed over $1.9 billion in loan originations.
Meanwhile, technical indicators suggest a potential market bottom for ADA. The 30-day Market Value to Realized Value (MVRV) ratio has fallen sharply, indicating most holders are at a loss—a historical pattern that often appears near market bottoms as weak hands exit. Open Interest has also declined, signaling that short-term speculators have left the market.
Looking ahead, Cardano is poised for significant technical upgrades, with the next 45 days expected to bring its most substantial changes since the Alonzo era. The launch of the Midnight privacy chain by the end of March, with support from Google and Telegram, aims to offer selective privacy for regulated use cases.
