Grayscale Favors Avalanche and Morpho Over ADA—Is Cardano Losing Institutional Momentum?

Institutional crypto investment firm Grayscale has made significant changes to its Q3 2025 Top 20 cryptocurrency list, adding Avalanche (AVAX) and Morpho while notably excluding Cardano (ADA) once again. This strategic shift raises critical questions about ADA’s institutional appeal and whether the blockchain platform faces challenges in maintaining institutional momentum despite recent government backing.

Grayscale’s Strategic Portfolio Reshuffling Signals Market Shift

Grayscale updated its Top 20 crypto assets for the third quarter of 2025, naming Avalanche (AVAX) and Morpho as new entrants while dropping Optimism and Lido DAO. The investment management firm emphasized that these changes reflect a research-driven selection process that favors specific technical capabilities and market positioning.

Grayscale’s decision to include Avalanche was driven by its technical scalability, which allows swift and cost-efficient transactions. The blockchain’s robust network design and consensus mechanism have positioned it as a preferred choice for institutional investors seeking exposure to high-performance layer-1 protocols.

Morpho’s inclusion represents Grayscale’s growing interest in decentralized finance (DeFi) lending protocols. The protocol’s innovative peer-to-peer lending model and capital efficiency features align with institutional preferences for sophisticated DeFi infrastructure investments.

Cardano ADA Exclusion Despite Government Strategic Reserve Status

The absence of ADA from Grayscale’s updated list appears particularly striking given Cardano’s recent institutional developments. In March 2025, the U.S. government named Cardano as one of five cryptocurrencies—alongside Bitcoin, Ethereum, XRP, and Solana—to be held in a national digital asset reserve. This governmental endorsement positioned ADA as a strategically important asset at the federal level.

Despite this significant milestone, Grayscale’s research team prioritises different evaluation criteria. The firm’s assessment likely focuses on immediate technical capabilities, ecosystem development velocity, and current market adoption rather than regulatory positioning alone.

Institutional Investment Patterns Show Mixed Signals for ADA

Recent data reveals conflicting signals regarding Cardano’s institutional adoption trajectory. On-chain metrics from IntoTheBlock reveal a 12% increase in large transaction volume (transactions over $100,000) between late April and early May 2025, suggesting that whales and institutional investors may already be accumulating ADA.

These metrics indicate continued institutional interest in ADA, despite its exclusion from Grayscale’s top-tier selection. The cryptocurrency’s technical development progress, including the anticipated Hydra layer-2 solution and ongoing governance improvements, attracts long-term institutional investors focused on blockchain fundamentals rather than short-term market positioning.

Optimistic forecasts suggest ADA could reach significant price levels by the end of 2025, driven by technological advancements like the Hydra layer-2 solution, increased DeFi adoption, and institutional investment. These projections reflect confidence in Cardano’s long-term institutional appeal, independent of current portfolio selections by major investment firms.

Avalanche and Morpho Capture Institutional Attention Through Technical Excellence

Avalanche’s selection reflects institutional investors’ growing focus on blockchain scalability and transaction efficiency. The network’s subnet architecture and consensus protocol enable high throughput while maintaining decentralization—qualities that resonate with institutional investment criteria.

Morpho’s inclusion signals increasing institutional recognition of sophisticated DeFi protocols. The lending platform’s peer-to-peer model eliminates traditional intermediaries while providing enhanced capital efficiency, features that align with institutional demands for transparent and efficient financial infrastructure.

These selections demonstrate Grayscale’s preference for projects with clear technical differentiation and immediate utility rather than longer-term development potential. The firm prioritizes assets demonstrating current market traction and technical superiority over those with primarily future-oriented value propositions.

Market Implications for Cardano’s Institutional Strategy

Grayscale’s portfolio decisions carry significant weight in institutional crypto investment circles, often influencing broader market sentiment and investment flows. ADA’s continued exclusion from the top-tier list may signal that institutional investors require more immediate technical achievements and ecosystem development before increasing exposure.

However, Cardano’s inclusion in the U.S. strategic crypto reserve provides a counterbalance to this institutional hesitation. Government backing often precedes broader institutional adoption, suggesting that ADA’s institutional momentum may be building through different channels than traditional investment fund selections.

Conclusion

Grayscale’s preference for Avalanche and Morpho over Cardano reflects the complex dynamics shaping institutional cryptocurrency investment decisions. While ADA faces challenges in capturing immediate institutional attention through traditional investment vehicles, its government strategic reserve status and growing on-chain institutional activity suggest alternative pathways to institutional adoption.