DATCo Pressure and Bitcoin Liquidity in 2025

Overview: A layered sell-off in Bitcoin markets

Bitcoin experienced sizeable weakness in late 2025, driven by an intersection of macro uncertainty, large-scale selling and a structural thinning of market liquidity. Beyond headline narratives — changing rate-cut expectations, institutional flows and miner selling — a less visible but powerful source of supply has emerged: publicly traded digital-asset treasury companies (DATCos) that deployed corporate capital to accumulate crypto reserves.

These entities helped channel billions of new demand into crypto earlier in the year. But the way many of them raised and financed their balances now creates a dynamic that can amplify downside moves: when valuations deteriorate, financing terms and market pressures can force rapid asset sales into already thin markets.

What are Digital Asset Treasury Companies (DATCos)?

DATCos are public or private firms that hold cryptocurrencies as a material part of their corporate treasury. Their pitch to investors was straightforward: provide a listed vehicle to gain exposure to crypto appreciation without buying coins on your own wallet.

In 2024 and 2025 many DATCos raised capital quickly, using a mix of equity and debt-like instruments to fund large crypto purchases. That influx of capital helped push prices higher when liquidity conditions were healthier. But the same structures that enabled rapid accumulation can become destabilizing when markets turn.

How financing choices turn into forced-selling risk

Key financing features that increase forced-selling risk include convertible notes, private investment in public equity (PIPE) deals and short-dated credit facilities. Those instruments often contain covenant triggers and repayment or conversion mechanics that become onerous if the underlying asset falls sharply in value.

When a DATCo’s share price approaches parity with the company’s net crypto holdings — commonly measured as market-to-net-asset-value (mNAV) — managers face pressure to restore value for shareholders. Buying back stock is one option, but that requires cash. Without surplus liquidity or access to cheap refinancing, selling crypto becomes the de facto tool to unlock capital, which can in turn pressure prices further.

Scale of the deployment and recent deterioration

Industry estimates show that DATCos collectively deployed tens of billions into crypto in 2025, with a particularly large concentration in the middle of the year. Aggregate deployments reached levels that materially moved markets during rally phases.

As 2025 progressed, several observable trends raised alarm:

• Large aggregate crypto holdings by DATCos created concentrated sell risk if firms needed liquidity.
• Certain asset classes (including some layer-1 tokens) experienced steeper drawdowns than major coins, hurting NAVs.
• Financing profiles skewed toward convertible and debt-like instruments, which have cliff events or covenant tests.

When those NAV gaps opened, a portion of DATCos found themselves effectively underwater, increasing the likelihood of asset sales precisely when markets could least absorb them.

Liquidity has thinned — why small sells move the market

Market depth in crypto spot order books contracted materially in the back half of 2025. At tight price bands — where immediate reactions matter most — order-book liquidity fell by a meaningful percentage from earlier in the year. This reduction in depth means that even relatively modest blocks of selling can cause outsized price gaps.

Two structural factors explain why:

• Market-making commitments declined. Unlike regulated venues where market makers face explicit obligations, many crypto liquidity providers can withdraw bids quickly, reducing the capacity to absorb large sell orders.
• High concentration of long positioning and levered exposures made participants sensitive to sharp moves, prompting pre-emptive withdrawals of liquidity and widening spreads.

When overleveraged treasuries or other large holders sell into a thin book, prices can gap lower, triggering margin calls, covenant breaches and further selling — a feedback loop that amplifies volatility.

Quantifying the potential selling flow

Estimating forced selling is inherently imprecise, since disclosure practices differ across firms. Yet even conservative scenarios are noteworthy. If only a low-single-digit percentage of the total DATCo-deployed balances is subject to forced liquidation in a compressed window, the resulting selling could equal or exceed other headline flows that drove price movement earlier in the year.

That matters because ETF and institutional outflows that once dominated the narrative were measured in the low billions over multiday stretches. Compressed, concentrated DATCo liquidations would likely be more acute and clustered, producing stronger short-term price pressure.

Retail behaviour and cyclical narratives

Retail psychology compounds structural selling. Historical cycle narratives and social chatter encourage pre-emptive exits, reducing the pool of conviction-based buyers who might otherwise absorb forced sales. When retail liquidity is sidelined — looking for a lower entry point or waiting for a clear bottom — the market lacks the natural buyer base needed during stress events.

In 2025 that effect coincided with macro uncertainty. Periods of data disruption and changing expectations about monetary policy increase correlation between risk assets and crypto, so drawdowns in equities and tech can spill over into digital-asset markets.

How this differs from well-capitalized corporate holders

Not all corporate treasury strategies share the same risk. Large, well-capitalized holders with conservative financing, minimal leverage and long-term mandates are better positioned to ride out volatility. The problem is concentrated among the newer cohort that used leverage and short-dated financing to accelerate accumulation — they have less structural ability to wait through multi-month drawdowns.

In other words, the source of systemic risk is not corporate adoption itself but the combination of leverage, asset concentration and fragile financing terms.

Signals to watch (practical checklist)

Traders and investors can monitor several observable indicators to assess near-term pressure:

• mNAV gaps: Watch public treasury companies trading at steep discounts to their stated crypto holdings.
• Debt and refinancing notices: Announcements of emergency financing, convertible-note extensions or liquidity raises are red flags.
• Exchange inflows: Large wallet-to-exchange transfers from corporate addresses or unusual spikes in deposits can signal imminent selling.
• Order-book depth: Monitor liquidity at narrow price bands; a sustained decline often precedes more violent moves.
• Quarterly disclosures: Quarterly reports and footnotes reveal realized sales, margin positions and financing covenants.

Risk management and positioning guidance

Market participants should treat the environment as liquidity-driven rather than purely fundamental. That alters how risk is managed:

• Reduce concentration and avoid levering into directional crypto exposure during periods of thin depth.
• Use staggered entries or dollar-cost averaging rather than attempting to time precise bottoms.
• Keep cash buffers or stablecoin reserves to take advantage of dislocations rather than being forced sellers.
• For short-term traders, widen risk controls and account for potential slippage when placing large orders.

2025 outlook: what could change the dynamic

Several developments would alleviate DATCo-driven pressure and restore healthier price discovery:

• Improved market-making commitments and reduced bid withdrawals, restoring order-book depth.
• Refinancing or balance-sheet stabilization among leveraged treasuries, lowering the probability of clustered liquidations.
• Return of coordinated demand — institutional re-entry, renewed ETF flows or retail conviction — to soak up excess supply.

Absent those shifts, the path higher for Bitcoin in 2025 may remain rugged, with intermittent rallies prone to retracement until forced sellers exhaust their mandates or restructure financing.

Longer-term perspective

Corporate adoption of crypto is a sign of maturation. However, maturation also introduces the same leverage- and financing-related risks seen in other markets. History shows that leveraged structures amplify both gains and losses; the resulting cascades are not unique to crypto.

For investors with multi-year horizons, dislocations caused by forced selling can present accumulation opportunities — provided there is sufficient risk tolerance and capital to withstand extended volatility. For shorter-term market participants, understanding liquidity dynamics and the behavioral component of retail flows is critical to avoiding avoidable losses.

Final thoughts

Late-2025 volatility highlighted how the intersection of financing structures and liquidity shortages can transform otherwise moderate selling into market-moving events. Digital-asset treasury companies helped attract fresh capital to crypto, but some of the same mechanisms that enabled rapid accumulation now pose the risk of pressing price action when markets are thin.

Monitoring transparency signals, on-chain flows and order-book health is essential for navigating this environment. Whether you are allocating capital or managing an active position, prioritize liquidity-aware risk management — markets in 2025 are as much a test of balance-sheet resilience as they are of macro or fundamental narratives.

Disclaimer: This post is a compilation of publicly available information.
MEXC does not verify or guarantee the accuracy of third-party content.
Readers should conduct their own research before making any investment or participation decisions.