Bitcoin Encounters a Hidden Wave of Selling From Overleveraged Treasury Firms

A $42 billion corporate treasury bet is unraveling just as market liquidity vanished, and most traders have no idea this double pressure exists.

Bitcoin slid to $91,500 on Monday, November 17, erasing most of its 2025 gains and sending the Crypto Fear & Greed Index to 10, its lowest reading since February.

If you’re tracking crypto, you’ve probably heard the usual explanations: Fed rate-cut expectations collapsing, institutional ETF outflows hitting $2.33 billion in November, and miners dumping 71,000 BTC onto exchanges to cover costs after the April halving cut their revenue in half.

Those are all real factors. But there’s a less-discussed force adding pressure that most retail traders aren’t watching: Digital Asset Treasury Companies, or DATCos, a category of publicly traded firms that barely existed two years ago.

These companies raised billions in 2024 and early 2025 with a simple pitch: we’ll buy and hold Bitcoin, Solana, and other crypto assets as corporate reserves, giving public market investors a way to bet on crypto appreciation without directly buying coins.

Now many of them are underwater. And their funding structures (convertible notes, PIPE deals, and other debt instruments) are creating what analysts call "forced seller dynamics" at the wrong time.

The Numbers Behind the Problem

Digital Asset Treasury Companies poured an estimated $42.7 billion into crypto throughout 2025, with $22.6 billion deployed in Q3 alone. The strategy worked well when Bitcoin rallied from $60,000 in early 2025 to a peak above $126,000 in early October. Reuters has also reported on the rapid growth and funding risks of these DATCos.

But since that peak, things have reversed.

Solana-focused treasury companies saw their aggregate net asset value drop from $3.5 billion to $2.1 billion, a 40% decline. When a DATCo’s market-to-net-asset-value ratio (mNAV) falls toward parity, meaning the stock price is roughly equal to just the value of the crypto it holds, management faces pressure to sell crypto assets to buy back the company’s own stock.

News coverage captured the situation: "The absence of conviction-based spot demand has become increasingly apparent as buyers who accumulated positions over the last six months now find themselves significantly underwater."

In other words: companies that Wall Street praised six months ago for "corporate crypto adoption" are now potential forced sellers, adding supply when demand has dried up.

Why This Is Different From MicroStrategy

It’s important to distinguish between different types of corporate crypto holders.

MicroStrategy (NASDAQ:MSTR) (now rebranded as "Strategy") has become the poster child for corporate Bitcoin accumulation. The company holds primarily Bitcoin, has manageable debt structures, and recently purchased another 8,178 BTC near $93,000 even during this recent weakness, according to Bitcoin Magazine.

But many smaller DATCos took a different path. As Moody’s analyst Cristiano Ventricelli warned, these companies "are expanding towards more exotic and less liquid cryptocurrencies, and that’s exactly where the risk could be much higher."

The risk is not about which assets they hold, but how they funded those purchases.

Many DATCos used convertible notes and PIPE financing to raise capital for crypto buys. These structures create what is described as a "fragile structure": when crypto prices fall, these companies struggle to service debt or refinance without triggering what critics call a "death spiral." Forced asset sales push prices lower, making their balance sheets worse, forcing more sales.

How Forced Selling Works in Practice

When a DATCo’s stock trades below the value of its crypto holdings (mNAV below 1.0), shareholders pressure management to unlock value. The most direct way to do that is buying back stock, but that requires cash. If the company doesn’t have excess cash, it needs to sell crypto.

Even if management wants to hold long-term, debt covenants or convertible note terms may force asset sales when certain thresholds are breached.

One on-chain analysis noted: "The concentration of November deposits around Bitcoin’s post-crash lows near $100,000 suggests miners may have engaged in defensive selling." Similar dynamics apply to overleveraged treasury companies.

This isn’t speculation. The impact of these treasury companies on Bitcoin’s recent price action is now clearly visible as their underwater positions force defensive moves.

Why Small Selling Moves Prices So Violently Now

DATCo forced selling wouldn’t matter as much if market liquidity was normal. But it’s not.

CoinDesk Research documented a key fact: Bitcoin’s order book depth at the 1% price band collapsed from approximately $20 million in early October to just $14 million by mid-November, a 33% decline that never recovered. More than just a temporary volatility, analysts call it a "deliberate reduction in market-making commitment."

Market makers are the professionals who maintain buy and sell orders that allow traders to execute without massive price swings. During the October tariff shock that triggered liquidations, on-chain analysis revealed market makers had warning before they completely withdrew their bids. They saw the massive long positioning, calculated the coming liquidation cascade, and pulled liquidity.

Unlike stock exchanges where market makers have regulatory obligations, crypto market makers can withdraw at will. And they did. Kaiko data showed Bitcoin’s market depth falling from $766 million to $535 million.

This creates a feedback loop: when DATCos are forced to sell into thin order books, prices gap lower. Those price drops trigger more forced selling from other overleveraged players. Without professional market makers absorbing the pressure, retail stop-losses get blown through.

CoinDesk concluded: "This failure of BTC and ETH liquidity to recover is not a quirk of timing but a structural shift." The infrastructure that normally absorbs selling pressure quietly disappeared, which is why even modest DATCo liquidations move prices dramatically.

As Digital Asset Treasury companies lost $1.4B (40% decline), Bitcoin’s market depth collapsed 30%, a toxic combination that amplified price declines

How Much Selling Pressure Could This Create?

Disclosure varies widely among smaller DATCos, making it hard to quantify precisely.

What we know from public filings and reports:

• Total Deployment: $42.7 billion deployed into crypto by DATCos in 2025
• Concentration Risk: Solana treasury holdings lost 40% of value since October, with aggregate net asset value dropping from $3.5B to $2.1B
• Funding Risk: An unknown but "significant" portion was funded through convertible debt rather than cash equity

Even if only 10-15% of these positions face forced liquidation due to debt covenants or mNAV pressures, that’s $4.3 to $6.4 billion in potential selling over the coming weeks.

For context, the entire November Bitcoin ETF outflow (which drove significant headlines) was $2.33 billion. DATCo forced selling could add double the selling pressure that already moved markets. And unlike ETF outflows that happen gradually, forced liquidations often cluster as prices break key technical levels.

Retail Psychology Making It Worse

While DATCos face forced selling, retail is engaging in voluntary selling based on historical patterns, creating a self-fulfilling prophecy.

Reddit communities show the fracture. One user wrote: "I’m planning to liquidate all my assets because I have a strong feeling that this will coincide with the beginning of the bull market" [posted sarcastically about timing the cycle]. Another stated: "Some friend told me that sell your stuff in November because the same crash is coming soon like 2020/2021."

Investors who believe in Bitcoin’s four-year halving cycle are selling early to avoid what they think will be a 70-80% drawdown, the same pattern that followed previous cycle peaks. Bitwise CIO Matt Hougan argues the four-year cycle is "dead" due to ETF flows and institutional adoption. Yet retail, armed with historical charts, is front-running the crash anyway.

One Reddit user stated: "Bitcoin could fall below $30K" based on cycle patterns. Another noted: "Bitcoin and ETH need to break all time highs for liquidity to trickle down into alts. So all eyes on BTC and ETH."

The belief in the cycle may be what breaks the cycle. This retail exit removes the "conviction-based spot demand" that could absorb DATCo forced selling. There’s no coordinated buying pressure when retail is sitting on the sidelines waiting for $30K.

Macro uncertainty compounds this. The White House stated that missing October economic data from the government shutdown left the Fed "flying blind at a critical period." Without CPI and jobs reports, Fed rate-cut expectations collapsed from 67% to 43% probability. Bitcoin, with its 0.85 correlation to dollar liquidity, sold off hard as investors couldn’t price risk in a data vacuum.

What to Watch

If you’re trading Bitcoin or crypto-exposed stocks, here are the signals that matter:

1. DATCo Stock Performance Relative to Bitcoin: Check whether publicly traded companies like BitMine Immersion, Forward Industries, and others are trading at significant discounts to their stated net asset value. Widening discounts typically precede forced selling as management seeks to close the gap.

2. Debt Refinancing Announcements: Watch for announcements of emergency capital raises, convertible note extensions, or asset sales. These are clear signals a company is under pressure.

3. On-Chain Flow Spikes: CryptoQuant and similar platforms track large deposits to exchanges. Unusual spikes from corporate wallets (separate from miner selling) can indicate DATCo liquidations.

4. Quarterly Earnings Disclosure: Most DATCos must disclose their crypto holdings and any sales in quarterly reports. The next wave of Q4 2025 disclosures in early 2026 will reveal how many companies sold during this November downturn.

The Broader Picture

To be clear: not all corporate crypto accumulation is problematic. Companies with strong balance sheets, minimal leverage, and patient capital (like Strategy) can ride out volatility.

The issue is the newer wave of companies that raised capital specifically to make leveraged bets on crypto appreciation, often in less-liquid assets, using debt structures that don’t leave room for extended drawdowns.

There’s also an hard truth about what DATCos actually bought. They marketed their holdings as "digital gold reserves", a hedge against inflation and tech volatility. But CME Group research shows Bitcoin’s correlation with equities has sustained a 0.0 to 0.6 range since 2020, with spikes above 0.8 during stressed market environments, a pattern analysts say has intensified in November 2025.

When AI stocks like C3.ai dropped 54% year-to-date and Nvidia fell on AI spending concerns, Bitcoin crashed in sympathy. Gold is up 29% year-to-date; Bitcoin gained just 4% before this recent crash erased those gains. DATCos sold investors on "digital gold" that actually trades like a leveraged Nasdaq ETF.

We’ve seen this before. Mortgage REITs in 2008 used leverage to amplify real estate returns. When housing fell 20%, their debt covenants forced selling that accelerated the crash to 40%. Different asset, same leverage mechanics. The lesson: leverage works both ways, and forced selling creates cascades that fundamentals alone don’t justify.

Major financial outlets have been flagging these structural risks in recent weeks. This isn’t coming from fringe commentators but from mainstream institutional research and market coverage pointing to a real, measurable dynamic.

While gold surged 29% YTD, Bitcoin’s 4% gain trails even Nasdaq. Its 0.75 correlation with tech stocks undermines the ’digital gold’ pitch that raised billions for DAT companies

What This Means for Your Bitcoin Position

If you hold Bitcoin or crypto-exposed stocks, you should factor in that forced selling from overleveraged treasury companies could keep pressure on prices in the near term, independent of macro conditions, Fed policy, or retail sentiment.

This doesn’t mean Bitcoin can’t recover. It means the path higher may require either:

1. Stabilization of DATCo balance sheets (crypto prices holding long enough for companies to refinance or restructure)
2. Completion of forced liquidations (weak hands cleared, supply pressure removed)
3. New demand sources (ETF inflows returning, institutional buying resuming, retail FOMO)

Right now, points 1 and 2 are incomplete, and point 3 is absent. That’s why many analysts see continued near-term pressure even if long-term fundamentals remain intact.

The Fear & Greed Index at 10 historically marks periods when patient capital accumulates at attractive prices. But "patient capital" is the key phrase: this setup rewards buyers who can wait out forced selling, not traders trying to catch a quick bounce.

Closing Thought

Wall Street praised corporate crypto adoption as the maturation of Bitcoin from a retail toy to an institutional asset class. That thesis isn’t wrong, but it’s incomplete.

Maturation also means institutional leverage, debt covenants, and funding pressures (the same forces that amplify selling during drawdowns in every other asset class).

Digital Asset Treasury Companies brought billions in new demand to crypto markets in 2024 and early 2025. In late 2025, some of those same companies are contributing to supply. That’s not a scandal. It’s how leveraged markets work.

The question for traders is whether you’re positioned to handle continued pressure while these dynamics play out, or whether you’re expecting a quick reversal that may not come until the forced sellers are done.

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This article is for informational and educational purposes only and is not investment advice or a recommendation to buy or sell any security or cryptocurrency. The author does not hold a position in any securities or assets mentioned. Cryptocurrency trading involves significant risk and is not suitable for all investors. Always conduct your own research before making investment decisions.