Cardano as U.S. Reserve Asset? Experts Remain Skeptical
Key Takeaways
- Discussion about Cardano (ADA) as a potential U.S. reserve asset is gaining attention.
- Crypto experts express doubts about ADA’s suitability compared to Bitcoin (BTC) and Ethereum (ETH).
- Cardano’s DeFi sector lags far behind Ethereum, with a Total Value Locked (TVL) of $448.9 million.
- Large investors are pulling out capital, indicating weak institutional confidence.
- Political mentions drive market sentiment, but fundamental data continue to show weaknesses.
Cardano as a Reserve Asset: A Realistic Option?
Cardano is increasingly mentioned in discussions about a U.S. national crypto reserve. While Bitcoin is considered digital gold and Ethereum is seen as a possible alternative, the question remains whether ADA fits into this category.
Venture fund manager David Nage analyzed Cardano’s position in the DeFi sector and found that its TVL of $448.9 million in Q4 2024 accounts for just 0.4% of the entire DeFi market. Ethereum dominates with $50 billion. Despite an increase in active addresses from 25,000 to 70,000, Cardano’s ecosystem remains relatively small.
Resistance from the Crypto Industry
Several prominent industry voices have expressed skepticism about Cardano’s suitability as a reserve asset.
Cameron Winklevoss, co-founder of Gemini, emphasized that only Bitcoin qualifies as a store of value, with Ethereum being a possible exception. Brian Armstrong, CEO of Coinbase, suggested two options: either Bitcoin alone or a market capitalization-weighted index. The latter would include Cardano but disadvantage it due to its lower market cap.
Market Development and On-Chain Data
Cardano recently experienced a 60% price increase, fueling speculation about its long-term potential. However, on-chain data tells a different story.
According to IntoTheBlock, the number of active addresses peaked at 320,000 during the 2021/2022 bull market but currently sits below 100,000. This trend suggests that the network is struggling to regain previous activity levels.
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Santiment analyses show that much of the discussion around Cardano is driven by political mentions. Terms like “Trump,” “strategic,” and “reserve” dominate the debate, while fundamental developments receive less attention.
Institutional Caution
Institutional investors appear to remain cautious. Large investor inflows dropped by 97% within a week. While whales reduced their holdings by 1.68%, mid-sized investors increased their positions by 1.60%. This suggests a redistribution of capital rather than a new wave of institutional investment.
Cardano’s Position in the Stablecoin Market
Another argument against ADA as a reserve asset is its minor role in the stablecoin sector. Cardano accounts for only $22.3 million of the $223 billion stablecoin market—just 0.01%.
Analysts at Bernstein argue that convincing the U.S. Congress to accept Bitcoin as a digital store of value is already challenging. The inclusion of additional blockchain assets in a national reserve is even less likely.
What Needs to Change?
For Cardano to be seriously considered as a reserve asset, several fundamental metrics must improve:
- The number of active addresses should return to previous highs of 320,000.
- The DeFi TVL must grow beyond its current 0.4% market share.
- The stablecoin infrastructure should expand significantly beyond its current 0.01% of the total market.
David Nage emphasizes that Cardano will only make sense as a reserve asset once it develops products used by millions. Until then, ADA’s political mentions remain more speculative than substantial.
Our Assessment
Cardano has made progress in recent years but still lags far behind Bitcoin and Ethereum in terms of suitability as a reserve asset. Its low market penetration in the DeFi and stablecoin sectors, along with weak institutional confidence, shows that ADA has a long way to go.
Whether Cardano will ever become part of a national crypto reserve depends on its ability to address its fundamental weaknesses. Until then, it remains an interesting but speculative debate.
| Symbol | BTC |
| Coin type | Alt Coin |
| Transaction Speed | Slow |
| Pros |
|
| Cons |
|
| Further practical applications | |
| Price | $91,969.00 |
| 24h % | 4.85 % |
| 7d % | 8.76 % |
| 30d % | -9.36 % |
| 60d % | -6.27 % |
| 1y % | 44.92 % |
| Market Cap | $1,815,090,073,811.00 |
| Max. Supply | 21,000,000.00 |
| Official Links | Website | Whitepaper | Source Code |
| Socials | Reddit | X | Message Board |
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