Cardano [ADA] has faced sluggish momentum and choppy trading action in recent weeks, with its price hovering below key resistance levels. Yet, a major shift in strategy—led by founder Charles Hoskinson—could flip the script.

In a bold new move, Cardano plans to convert a portion of its $1.2 billion treasury into Bitcoin. The goal? To generate yield and use that yield to buy back ADA, reducing supply and potentially strengthening long-term price dynamics.

On paper, it’s a smart feedback loop: Use the most secure crypto asset to grow reserves, and recycle that value into ADA demand. But the execution—and the market’s reaction—could introduce volatility in the short term.

Cardano Bets Big on Bitcoin

In a recent interview, Charles Hoskinson outlined how Cardano is looking beyond traditional crypto treasury management. Instead of sitting on ADA reserves or relying solely on DeFi staking returns, Cardano aims to deploy part of its treasury into Bitcoin—a surprising yet strategic move.

Why Bitcoin? As institutions, sovereign entities, and corporations increasingly treat Bitcoin as a store of value, it has become more attractive as a yield-bearing asset. With protocols like Runes and services offering BTC-backed returns, Bitcoin’s utility has evolved.

According to estimates, if Cardano converts part of its treasury—say around $1.2 billion—it could acquire roughly 11,320 BTC at current spot prices near $106,000.

If Bitcoin were to climb to $110,000, that position could yield an unrealized gain of $40 million. Redirected back into the ecosystem via ADA buybacks, Cardano could repurchase 66.6 million ADA at a spot price of $0.60.

This mechanism would reduce ADA’s circulating supply, creating upward price pressure over time.

ADA Price Action Faces Near-Term Hurdles

While the long-term plan is sound in theory, ADA’s current technicals reveal a fragile structure. The $0.60 support level has failed to attract consistent buyer interest, and on-chain data shows large holders retreating.

AMBCrypto reports a drop in ADA/BTC relative strength, with the pair pulling back to pre-election levels. This weakening ratio implies that ADA is underperforming even during brief Bitcoin rallies.

Moreover, futures markets reflect weak speculative interest. Order books lack aggressive bids, indicating that short-term traders aren’t positioning for a breakout. Instead, the token appears trapped in a cycle of brief pumps followed by sharp retracements—classic signs of retail-driven volatility with minimal institutional backing.

ADA has already logged two lower lows in June, raising the probability of a deeper correction before any meaningful recovery.

Will the Market Absorb the Sell-Side Pressure?

If Cardano starts executing its Bitcoin strategy, the initial market reaction may not be entirely bullish. Offloading large ADA holdings to buy BTC could trigger short-term sell-side pressure, especially if not done gradually.

Retail investors could misinterpret the strategy as a lack of confidence in ADA itself, causing panic selling. Given the thin liquidity observed on futures platforms, even small waves of selling could escalate quickly.

Unless long-term investors or “smart money” begin accumulating in anticipation of this structural shift, ADA risks falling into a short-term bearish trap—even if the fundamentals are improving.

A Paradigm Shift for Layer-1 Treasuries?

Despite the risks, Cardano’s strategy is innovative and signals a bigger transformation in how Layer-1 chains manage protocol value.

Rather than depending solely on staking or inflationary tokenomics, Cardano is pursuing real yield through BTC—leveraging Bitcoin’s stability while looping gains back into ADA.

If successful, this approach could set a new precedent for crypto treasury diversification and sustainability. It also subtly aligns Cardano’s future with Bitcoin’s growth—a bold move in an era of cross-chain convergence.

Final Take

Cardano’s $1.2 billion pivot toward Bitcoin could become a turning point for ADA. The mechanism—converting idle reserves into BTC and using yield for ADA buybacks—has the potential to restore long-term value.

However, short-term market reaction may be rocky. Without strong buyer demand or clear accumulation from large players, the plan may feel like a risky gamble before it’s proven effective.

In the end, this strategy reflects Hoskinson’s high-conviction vision: A slower, sustainable path to ADA price strength—if the market has the patience to let it unfold.