Mike Novogratz warns that XRP and Cardano need to demonstrate genuine utility beyond their followers

The founder and CEO of Galaxy Digital, Mike Novogratz, poses a fundamental challenge to two of the most established cryptocurrency projects: as the market matures, those tokens that do not function as money need to justify their existence through tangible results, not just loyal communities. In a recent conversation with Alex Thorn, Head of Research at Galaxy, Novogratz expressed doubts about the ability of XRP and Cardano (ADA) to maintain their positions in an increasingly competitive ecosystem.

“Will Ripple hold steady? Will Cardano hold steady?” was the central question posed by the veteran investor, reflecting a growing concern about whether these projects can evolve beyond their current supporter bases.

What do XRP and Cardano lack to demonstrate their real utility?

Although XRP and ADA have resilient and passionate communities, the reality of their adoption in the real world remains questionable. Mike Novogratz highlighted that the organic activity of both projects remains relatively weak compared to their market valuations. “Charles Hoskinson has kept the Cardano community with a blockchain that people don’t really use much,” Novogratz observed, pointing to a similar pattern in Ripple.

Ripple, the fintech company behind XRP, promotes its token as a bridge asset to facilitate fast, low-cost cross-border payments through its RippleNet network, with partnerships including banks and fintech platforms. However, the volume of organic transactions has not matched the institutional adoption narrative.

According to current data, XRP has a market capitalization of approximately $118.84 billion, ranking fifth among all cryptocurrencies. Cardano, on the other hand, is around $13.44 billion, positioned around number 12. Both projects have significant user bases, with XRP holding 7.5 million addresses and Cardano approximately 10 million.

On-chain activity comparison: XRP, Cardano vs. Solana

Network activity metrics reveal a notable contrast. While XRP and Cardano exhibit large market capitalizations, the number of active transactions and daily activity on their blockchains are comparatively modest. Solana, by contrast, typically records millions of active addresses daily, driven by DeFi applications, meme tokens, and developed ecosystems. Despite this, SOL maintains a market cap of approximately $73.71 billion, significantly lower than XRP but with a considerably higher level of activity.

This disparity underscores a central point in Mike Novogratz’s argument: in a mature market, real utility and genuine usage will outweigh future potential narratives.

The market evolves: from narratives to real fundamentals

Mike Novogratz believes that the cryptocurrency market is undergoing a structural transformation. Tokens that do not resemble “money” for general purposes — like Bitcoin — will be evaluated similarly to traditional companies: based on revenue generation, verifiable adoption, and measurable value. This evolution implies that projects with dedicated communities but without a real use base will face increasing market pressures.

An emerging example is Hyperliquid, a decentralized perpetual exchange that generates real income by burning most of its profits to buy back its token. This economic model, similar to that of publicly traded companies, represents the kind of fundamentals that attract institutional investment in the new phase of the market.

“Can you keep a community united when there are more and more options?” was Novogratz’s rhetorical question, capturing the essence of the dilemma: community loyalty cannot replace demonstrable utility in a market saturated with innovative alternatives.

The macroeconomic context intensifies pressure

The broader economic environment adds additional pressure. Analysts project that inflation in the United States could exceed 4% during 2026, driven by tariffs, stricter labor markets, possible migration changes, high fiscal deficits, and expansive financial conditions. These factors could counteract productivity gains from artificial intelligence and real estate disinflation.

If higher inflation materializes, the Federal Reserve could face limitations in reducing interest rates with the aggressiveness that cryptocurrency markets expect, impacting risk asset appetite and further emphasizing the importance of fundamentals over speculative narratives.

For XRP and Cardano, Mike Novogratz’s message is clear: in the next phase of the market, having loyal followers will not be enough. The true test will be demonstrating that their blockchains can generate tangible economic value, mass adoption, and measurable results.