Cardano Plans $1.2 Billion Bitcoin Allocation for ADA Buybacks

Cardano, a prominent blockchain platform, has announced a strategic plan to allocate a portion of its $1.2 billion treasury into Bitcoin. This move, proposed by Charles Hoskinson, the founder of Cardano, aims to generate yield from Bitcoin and use it to buy back ADA, Cardano's native cryptocurrency. The plan involves converting part of the treasury into Bitcoin, with the intention of using the generated yield to support ADA's price action.

According to Hoskinson, this strategy is designed to gradually reduce the supply of ADA and support its price appreciation. At the current spot price of Bitcoin, Cardano could acquire approximately 11,320 BTC. If Bitcoin's price reclaims the $110,000 level, this position could 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, thereby reducing supply and reinforcing price support.

However, the market's ability to absorb the initial sell-side shock from this strategy remains uncertain. The $0.60 support zone for ADA has been structurally fragile, with large holders showing signs of retreat. The ADA/BTC pair has also retraced to its pre-election lows, indicating weakening relative momentum. Additionally, futures order books have revealed a lack of aggressive bids, keeping speculative liquidity thin and reducing short-term upside pressure. This has led to a situation where ADA has posted two lower lows this month, increasing the probability of a deeper correction ahead.

In this volatile setup, even a modest wave of selling could spark broader panic, particularly among retail participants. 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. The proposal marks a paradigm shift for Cardano, aiming for real yield instead of relying on the usual DeFi staking rewards. If successful, it could set a new standard for how Layer-1s manage long-term value, not just for ADA but for the broader cryptocurrency market.