Cardano plans to convert part of its treasury worth 1.2 billion USD into Bitcoin and use the profits to buy back ADA.
Can the market absorb the initial sell-off shock?
Price movements are erratic, liquidity is thinning, and confidence is gradually waning. Despite the ongoing optimism from Charles Hoskinson, Cardano [ADA] currently faces a rather bleak reality in the cryptocurrency market.
However, behind the scenes, movements are quietly underway. In a recent interview, Charles Hoskinson confirmed Cardano's new treasury strategy.
According to TinTucBitcoin, theoretically, this is a wise move that could support ADA's long-term price. However, the risks remain, putting ADA to the ultimate test while the upward momentum almost stagnates.
Cardano redirects 1.2 billion USD to Bitcoin.
Not only large financial institutions or governments, Bitcoin is now also viewed as a store of value asset by a surprising competitor – another Layer-1 blockchain. The reason: The ability to generate stable profits in a volatile interest rate environment.
In fact, Charles Hoskinson has just announced plans to reshape how Cardano operates its treasury. Specifically, using part of the 1.2 billion USD ADA treasury to buy Bitcoin, then reinvesting the BTC yield back into ADA.
Source: Messari
The scenario creates a feedback loop – gradually reducing supply, promoting natural price growth. With the current treasury, Cardano could buy about 11.32K BTC at a spot price of 106,000 USD/BTC.
If Bitcoin surpasses the 110,000 USD mark, this investment value could yield an unrealized gain of about 40 million USD. If converted to ADA, Cardano could buy back approximately 66.67 million ADA at a price of 0.60 USD/ADA.
As a result, ADA's supply continues to decrease, creating price support. The strategy has not yet been implemented but is expected to reshape the long-term value trend for ADA, setting a new standard for Layer-1 treasury management.
Will the market be able to absorb the initial shock?
According to TinTucBitcoin, Cardano's support zone at 0.60 USD is very fragile, with clear selling pressure from 'whales', and the ADA/BTC pair is dropping to election cycle lows – a sign of weakening upward momentum.
In the derivatives space, the futures order book shows weak buying power, thin speculative liquidity, making ADA's price susceptible to strong short-term fluctuations.
Overall, Cardano is caught in a ‘pump and dump’ loop. Institutional capital is not ready to buy at the bottom, even taking profits when prices recover, creating increasing selling pressure.
As a result, ADA has recorded two lower lows just this month, increasing the probability of entering a deep correction.
Source: TradingView (ADA/USDT)
With the current high volatility landscape, even a small wave of selling can trigger panic, especially among retail investors.
Therefore, if institutional capital does not quickly accumulate a large amount of ADA, this treasury strategy will be an extremely high-stakes gamble, especially in the short term.
Nevertheless, this proposal is a comprehensive shift. Cardano no longer puts its trust in traditional DeFi staking but aims for real profits. If successful, this will set a new precedent not just for ADA, but also for sustainable value management methods for Layer-1s.
Source: https://tintucbitcoin.com/cardano-bom-12-ty-usd-vao-bitcoin/
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