Is Charles Hoskinson Losing Faith in ADA?
TL;DR: Two near-term outflows (ADA to BTC, NIGHT unlocks) could be bearish for ADA
Short Summary
- Treasury shake-up. On 13 June 2025 Charles Hoskinson proposed converting ≈ $100 million of ADA in the on-chain treasury into Bitcoin and stablecoins (USDM, USDA).1
- Market reaction. ADA slid ≈ 4–6 % in the two trading sessions that followed, losing the key $0.60 level before finding support near $0.58.23
- Token-supply overhang. A separate June announcement unveiled 24 billion "NIGHT" tokens to be airdropped via Midnight's Glacier drop, plus dual-reward staking that issues NIGHT + ADA.45
- Why that matters. The BTC pivot and extra emissions deepen near-term sell pressure on ADA while expanding total Cardano-ecosystem supply into a market with muted alt-coin demand.
- Long-term upside is still possible if Bitcoin holdings appreciate and are recycled into buy-backs, and if Midnight's privacy layer drives real activity—but neither catalyst helps holders today.
Although I'm not super optimistic.
1. A Treasury Bet on Bitcoin
Hoskinson's livestream proposal would trade ≈ 140 million ADA (5–10 % of the $1.2 billion treasury) for BTC and regulated stablecoins. He argues the move will: (1) prime Bitcoin-based DeFi on Cardano, (2) generate non-inflationary yield to buy back ADA later, and (3) showcase Cardano's stablecoin rails.1
From a capital-structure lens, however, the treasury would be selling its own equity (ADA) to buy an external asset. Equity investors typically read that as management signaling the equity is over-valued—hence the swift price drop.2
Price action: ADA fell ~4 % on the first full day after the stream, extending a 35 % YTD draw-down.23
2. The NIGHT Token & Dilution Math
Midnight—a zero-knowledge privacy side-chain backed by IOG—will distribute 24 billion NIGHT:
- Eligibility: ADA, BTC, ETH, XRP, SOL, AVAX, BNB, BAT holders (snapshot 11 June 2025).5
- Unlock schedule: 25 % of allocations unlock every 90 days (fully unlocked after 360 days).4
- Staking: ADA stakers now earn ADA plus NIGHT rewards.
Unless NIGHT accrues real fees (I don't place much value on governance), the extra token stream is pure supply inflation on top of ADA's own supply inflation:
| Metric | ADA | NIGHT |
|---|---|---|
| Max supply | 45 bn | 24 bn |
| Circulating (Jul 2025) | 35.38 bn ADA7 | 0 bn (vesting begins Q3-25) |
| Annual inflation | ≈ 3.9 % ADA8 | 100 % first year (airdrop) |
Key worry: Aggregate demand for alt-coins is already thin; adding > 50 % extra units in the ecosystem may sap liquidity from ADA rather than expand the pie.
3. Short-Term Price-Pressure Checklist
| Pressure Point | Mechanism | Timing | Net Effect |
|---|---|---|---|
| Treasury BTC swap | OTC sale of ≈ 140 m ADA | Execution window "over a week" | Sell-side flow → bearish6 |
| NIGHT unlocks | 6 bn tokens unlock Q3-25 | Starts Jul–Aug 2025 | Airdrop recipients may dump → bearish4 |
| Dual-reward staking | Continuous | Ongoing | Structural sell pressure unless NIGHT utility emerges |
| BTC-funded ADA buy-backs | Triggered only after BTC yield/appreciation | Medium / long term | Potentially bullish later |
Bottom line: Two near-term outflows (ADA → BTC, NIGHT unlocks) hit before any inflows (BTC yield → ADA buy-backs). Expect downside volatility until at least the first NIGHT cliff in mid-September.
4. Long-Term Scenarios
| Scenario | Drivers | Price Impact by 2026 |
|---|---|---|
| Bull: BTC treasury grows 50 %; Midnight privacy dApps gain traction. | BTC bull market; regulatory clarity on ZK privacy. | ADA retests 2021 highs (>$2). |
| Base: BTC reserve flat; modest Midnight use; Cardano scaling delivers incremental TPS. | Organic L2 growth; stiff ETH/SOL competition. | ADA ranges $0.50–$1.00. |
| Bear: BTC flat/falls; NIGHT overhang persists; DeFi TVL stagnates. | Risk-off macro; alt-coin fatigue. | ADA revisits 2023 lows ($0.24–$0.30). |
For 2026 to allow ADA to retest highs it requires the BTC bull market, which I don't think is a given. My own personal bias on ADA is on the bearish side, but I try to offer some scenarios where my personal bias is wrong.
5. Takeaways for Traders & Holders
- Mind the unlock calendar. First NIGHT tranche lands 90 days post-airdrop; size positions accordingly.
- Watch treasury execution. If OTC desks mis-time sells, on-chain whale moves could front-run further dips.
- Utility, not optics, will decide NIGHT value. Track Midnight mainnet and real fee burn.
- Yield seekers: dual-reward staking boosts nominal APR but dilutes real return—model both coins' inflation.
- Value investors: wait for evidence that BTC reserves actually fund ADA buy-backs before treating the pivot as bullish.
Nothing herein is financial advice; always do your own research.