Cardano News Today: Galaxy's Novogratz Pressures XRP, ADA to Prove Utility to Survive

Galaxy CEO Novogratz Warns XRP, ADA Risk Irrelevance Without Utility

Galaxy Digital CEO Mike Novogratz has issued a stark warning to the XRP and Cardano (ADA) communities, stating that both tokens must prove real-world utility to remain relevant in the evolving crypto market. His remarks come after years of skepticism, with Novogratz previously dismissing XRP's centralized supply and ADA as a "weird cult." Now, he acknowledges the strength of their communities but cautions that loyalty alone won't be enough to compete with more fundamentally driven projects.

The shift in Novogratz's stance reflects a broader industry trend toward business-driven tokens. With each new market cycle, the crypto landscape becomes more competitive, offering investors more options. Novogratz argues that tokens relying solely on passionate but speculative communities may struggle to keep up with those that generate measurable value.

He pointed to Bitcoin as a prime example of a project that has established itself as a form of money, giving it a unique valuation framework. In contrast, he questions whether XRP and Cardano can maintain their positions without clear utility beyond community support.

A Market Moving Beyond Hype

The crypto market is transitioning from hype-driven narratives to a more fundamentals-based approach, Novogratz explained in a recent discussion with Galaxy Digital's Head of Research, Alex Thorn. He emphasized that investors now have more choices and are increasingly focused on projects that generate profits and demonstrate tangible use cases.

"Can Ripple hold it together? Can Cardano hold it together?" Novogratz asked. He praised Charles Hoskinson for keeping the Cardano community engaged despite the blockchain not seeing widespread adoption. However, he questioned whether that community loyalty would be enough to sustain Cardano as more competitors emerge.

Hyperliquid, a token with a clear value proposition, served as a contrast in Novogratz's analysis. The exchange burns 98% of its profits to buy back and burn tokens, creating a model that resembles equity investments. Novogratz sees this as a glimpse into the future of token economics, where clear revenue generation becomes a key differentiator.

XRP and Cardano's Challenges

Despite recent gains, XRP and ADA face significant challenges. Ripple's XRP, for instance, has long been criticized for its centralized supply and unclear utility. Although the token has seen a resurgence following the SEC lawsuit settlement and the launch of a spot ETF, analysts remain skeptical about its long-term value creation.

Cardano, meanwhile, has struggled to translate its academic research focus into real-world adoption. Hoskinson has emphasized the platform's smart contract capabilities and partnerships with governments, but widespread usage remains limited. Novogratz acknowledges Hoskinson's efforts to maintain community engagement but questions whether that will be enough to compete with more profit-driven projects.

Regulatory and Institutional Pressures

Regulatory developments and increasing institutional interest are further accelerating the need for real utility. As crypto projects are subjected to stricter scrutiny, the ability to demonstrate business fundamentals becomes crucial. Novogratz noted that regulatory clarity often favors projects with clear economic models and tangible use cases.

The U.S. Securities and Exchange Commission (SEC) has repeatedly emphasized the importance of economic substance over form, a stance that could pressure XRP and ADA to demonstrate more concrete utility. Institutions, too, are applying traditional financial evaluation frameworks to digital assets, focusing on revenue potential, competitive advantages, and management quality.

What This Means for Investors

For investors, the message is clear: community support is no longer a guarantee of long-term success. Novogratz advised investors to look for projects that generate real-world value, have clear revenue structures, and demonstrate measurable adoption. Metrics such as transaction fees, protocol revenue distribution, and developer activity are becoming increasingly important in evaluating a project's potential.

He also highlighted the importance of cross-industry utility, noting that successful projects will likely integrate across multiple sectors, from finance to supply chain management. This shift toward utility-driven models may intensify during the next market cycle, favoring tokens that can demonstrate their value beyond speculation.