Crypto’s 2025 year-end optimism — driven by digital asset treasuries (DATs), altcoin ETFs, and bitcoin’s historically strong seasonal performance — has instead collapsed into one of the sharpest drawdowns since the 2022 crypto winter.
Heading into Q4, investors were bullish. Bitcoin benefited from strong ETF inflows, newly launched DATs promised leveraged exposure, and analysts highlighted the final three months of the year as historically the strongest for gains. Expectations of looser U.S. monetary policy and a friendlier political backdrop added to the optimism, with many projecting record highs.
Reality proved starkly different. A $19 billion liquidation cascade in October drained liquidity, spot altcoin ETFs failed to counter selling pressure, and many treasury-heavy crypto companies shifted from buyers to potential forced sellers. Bitcoin is down 23% since early October, underperforming equities and precious metals.
DATs falter
Digital asset treasuries — publicly traded firms largely launched this year to replicate Michael Saylor’s MSTR strategy — initially sparked excitement. But as prices fell, DATs accelerated selling. Share prices plunged below net asset value, limiting their ability to raise funds. Some have even used cash to repurchase shares instead of buying crypto. Notably, KindlyMD (NAKA) now holds bitcoin worth more than twice its enterprise value. Analysts warn that other DATs could follow, dumping assets into an already fragile market and turning a promised growth flywheel into a tailspin.
Altcoin ETFs disappoint
U.S. spot altcoin ETFs drew initial inflows — Solana ETFs $900 million, XRP vehicles over $1 billion — but token prices fell sharply: SOL down 35%, XRP nearly 20%. ETFs for smaller altcoins like HBAR, DOGE, and LTC saw minimal demand as risk appetite collapsed.
Bitcoin seasonality fails
Historically, bitcoin’s fourth quarter has been the strongest, with an average Q4 gain of 77% since 2013. Exceptions — 2014, 2018, 2019, and 2022 — occurred during bear markets. 2025 now looks set to join that list, with BTC down 23% since October, its worst last-quarter performance in seven years if levels hold.
The October 10 liquidation sent BTC from $122,500 to $107,000 in hours, with altcoins falling further. Despite ETFs and institutional adoption, crypto remains highly speculative. Liquidity has yet to recover, and open interest has declined from $30 billion to $28 billion, suggesting recent gains largely reflect short-covering rather than genuine buying.
Crypto has lagged traditional markets since October: the Nasdaq is up 5.6%, gold 6.2%, while BTC is down 21%. This highlights the failure of 2025 catalysts and the lack of strong drivers for 2026.
Risks and silver linings
Many DATs bought heavily at market peaks; several now trade below mNAV, raising the risk of forced liquidations. Strategy (MSTR) CEO Phong Le noted BTC could be sold if mNAV falls below 1.0, though large-scale purchases continue. CoinShares has called the DAT bubble “already burst” in many ways.
Historically, sell-offs from treasury-heavy firms can create buying opportunities. Similar patterns emerged in 2022 following the collapses of Celsius, Three Arrows Capital, and FTX, suggesting cautious investors may find attractive entry points as DATs unwind.
