Leverage Shocks, Structured Selling, and Bitcoin’s Debasement Trade

Briefing Notes contain: (1) a summary of podcast content; (2) potential information gaps; and (3) some speculative views on wider implications for Bitcoin. Most summaries are for Bitcoin-centered YouTube episodes but I also do some on AI and technological advance that spill over to affect Bitcoin.

Summary

The November 21, 2025 episode of Kitco News features Mark Moss analyzing recent Bitcoin volatility driven by leverage unwinds and a large “structured seller” active at 9:30 a.m. Eastern. Moss argues that automatic deleveraging (ADL), record options expirations, and exchange risk controls help explain a roughly 20% drawdown without signaling a breakdown in long-term demand. He then situates Bitcoin and gold within a broader debasement trade shaped by fiscal dominance, synthetic inflation data, and emerging dedollarization channels.

Take-Home Messages

1. Leverage-Driven Volatility: Moss frames the recent 20% Bitcoin drawdown as a leverage flush amplified by automatic deleveraging and record options expirations rather than collapsing fundamentals.
2. Structured Daily Selling: A recurring 9:30 a.m. “structured seller” highlights how concentrated, time-clustered selling can shape intraday volatility and test market depth.
3. Bitcoin-Backed Corporate Finance Stress: MicroStrategy’s distressed preferred yields illustrate how credit markets and index providers struggle to price Bitcoin-heavy balance sheets even as those firms accumulate more Bitcoin.
4. Synthetic CPI and Fiscal Dominance: A CPI blackout forcing synthetic inflation metrics in a $7 trillion market raises the risk that policymakers misread inflation signals under fiscal dominance, with knock-on effects for debasement trades.
5. Dedollarization and Alternative Stores of Value: Early moves such as Mbridge show how cross-border payment rails that bypass the dollar could reduce automatic demand for Treasuries, reinforcing long-term demand for Bitcoin and gold.

Overview

Mark Moss opens by addressing Bitcoin’s roughly 20% monthly drawdown from the mid-$100,000s into the mid-$80,000s, arguing that the move reflected a leverage event rather than a collapse in underlying demand. He links this drawdown to a record $3.1 trillion options expiration that coincided with a Trump statement about 100% tariffs on China, which he says helped trigger about $20 billion in liquidations and roughly 1.6 million blown-up accounts. This sequence, in his telling, demonstrates how macro headlines and derivatives positioning can interact to drive extreme short-term price moves without necessarily changing a long-term thesis (check out my working paper, Bitcoin Worlds, for more on the long-term unsustainability of leverage in the Bitcoin ecosystem).

From there, Moss focuses on the mechanics of automatic deleveraging on major derivatives exchanges, emphasizing that these systems liquidated not just losing positions but also profitable ones as collateral values fell. He notes that a prominent market maker and a $200 million delta-neutral fund were effectively wiped out, not because their strategies were inherently flawed, but because exchange risk controls socialized losses as liquidity thinned. The result, he argues, is a structural vulnerability in Bitcoin market infrastructure where the very tools meant to contain risk can propagate it when stress hits.

The conversation then turns to an observed “structured seller” that appears to dump Bitcoin every morning at 9:30 a.m. Eastern, right as U.S. equity markets open. Moss presents this as evidence of a large, programmatic unwind, possibly tied to risk management or balance sheet adjustments at an institutional level. He stresses that, so far, the market has absorbed this recurring supply, suggesting that background demand and new inflows remain strong even under visible selling pressure.

Attention shifts to MicroStrategy as a high-profile example of a Bitcoin-backed structured finance model encountering stress. The host notes that the company’s preferred stock trades around 66 cents on the dollar with implied yields near 15%, signaling that bond investors view it as distressed even as the firm positions itself as a long-term Bitcoin vehicle. Moss counters that, at current prices, MicroStrategy has decades of runway to cover coupons and several tools before needing to sell Bitcoin, but he acknowledges that index providers and credit markets are still grappling with how to classify firms that hold more than half their assets in Bitcoin.

Stakeholder Perspectives

1. Bitcoin derivatives exchanges: Seeking to refine margining and automatic deleveraging frameworks so that risk controls do not themselves trigger cascading liquidations and reputational damage.
2. Institutional trading firms and hedge funds: Focused on execution timing, counterparty risk, and leverage management in an environment where a single macro headline or structured seller can erase complex positions.
3. Corporate treasurers at Bitcoin-heavy issuers: Evaluating whether debt-funded Bitcoin strategies remain viable when credit markets demand double-digit yields and benchmark inclusion is uncertain.
4. Central banks and fiscal authorities: Monitoring synthetic inflation indicators, Treasury liquidity, and dedollarization channels to understand how these shifts affect reserve management and monetary credibility.
5. Long-horizon Bitcoin holders and family offices: Weighing whether episodes like this are noise in a decade-long thesis or signals to adjust position sizing, hedging, and reliance on leveraged instruments.

Implications and Future Outlook

Moss’s account suggests that Bitcoin markets now inhabit a regime where leverage, exchange risk controls, and programmatic selling can dominate short-term price action. If derivatives venues fail to redesign automatic deleveraging, future macro shocks could trigger similar cascades that indiscriminately liquidate both weak and robust positions. Over the next few years, market infrastructure choices will determine whether volatility episodes remain contained or periodically spill over into broader systemic stress.

For corporate issuers, MicroStrategy’s experience underscores how Bitcoin-backed structured finance can simultaneously attract equity enthusiasm and credit-market skepticism. As more firms contemplate balance sheets with large Bitcoin allocations, index providers, rating agencies, and regulators will need clearer frameworks for classifying and supervising these hybrid entities. The outcome will shape whether Bitcoin becomes a mainstream treasury asset or remains concentrated in a small set of high-beta corporate structures.

At the macro level, the combination of synthetic CPI, fiscal dominance, and early dedollarization experiments like Mbridge points toward a more fragile information environment for monetary policy. If official inflation gauges are temporarily replaced by untested formulas while alternative payment rails reduce automatic dollar recycling into Treasuries, investors may lean more heavily on debasement trades in Bitcoin, gold, and real assets. Over a three- to five-year horizon, the tension between short-term liquidity pockets and a structural search for monetary hedges is likely to define Bitcoin’s role in global portfolios.

Some Key Information Gaps

1. How can Bitcoin derivatives venues redesign automatic deleveraging mechanisms to reduce the risk of cascading liquidations across profitable and unprofitable positions? Understanding ADL redesign options is crucial for limiting systemic volatility and maintaining confidence in exchange infrastructure during periods of stress.
2. How does repeated time-clustered selling by a single large actor affect intraday liquidity, volatility, and price discovery in Bitcoin markets? Clarifying these dynamics would help exchanges and regulators decide when structured selling becomes a market integrity concern rather than routine execution.
3. How sustainable is a Bitcoin-backed structured finance model like MicroStrategy’s when preferred share yields approach 15% and market sentiment turns risk-off? Assessing this sustainability will guide credit analysts and corporate treasurers considering similar strategies under different funding environments.
4. How does the replacement of official CPI with untested synthetic inflation measures in a $7 trillion market alter liquidity, risk premia, and hedging behavior? Answering this question is vital for policymakers and investors who rely on inflation-linked instruments to price debt and allocate capital.
5. How might wider adoption of cross-border payment systems like Mbridge that bypass the dollar alter demand for U.S. Treasuries and the pace of U.S. monetary expansion? Mapping this linkage will help analysts gauge how dedollarization interacts with the long-term debasement thesis that underpins many Bitcoin investment cases.

Broader Implications for Bitcoin

Market Infrastructure and Systemic Risk

Bitcoin’s maturation into a global asset class exposes how exchange-level design choices can generate or dampen systemic risk. Automatic deleveraging, margining rules, and the treatment of programmatic selling increasingly resemble core financial plumbing rather than peripheral features for speculative traders. Over the next decade, governance of this infrastructure will influence whether Bitcoin markets are perceived as robust enough to support large institutional allocations and policy-relevant investment activity.

Corporate Balance Sheets as Monetary Infrastructure

Firms that treat Bitcoin as a primary treasury asset, financed through complex capital structures, are evolving into de facto monetary infrastructures in their own right. When these entities face distressed funding costs, the ripple effects can extend beyond shareholders to credit markets, benchmarks, and regulatory narratives about balance-sheet risk. As more corporates experiment with Bitcoin-backed financing, the line between private capital structure innovation and systemic monetary experimentation will blur further.

Data Integrity, Policy Signals, and Hedging Behavior

Episodes in which official inflation data are replaced by synthetic metrics highlight how fragile policy signaling can become when core statistics are disrupted. In such environments, investors may rely more on market-based signals and hard-to-manipulate assets, reinforcing the appeal of Bitcoin as a hedge against both inflation and information failure. Over time, this dynamic could position Bitcoin not just as insurance against currency debasement, but also as protection against governance lapses in economic data production.

Global Payment Rails and Reserve Realignment

New cross-border payment systems that bypass the dollar, such as Mbridge-style platforms, foreshadow a world with more fragmented reserve and settlement architectures. As fewer trade flows automatically recycle into U.S. Treasuries, governments may need to rely more heavily on domestic balance sheets and explicit monetary expansion, strengthening the logic behind Bitcoin and gold as parallel reserves. In a three- to five-year horizon, these shifts could make Bitcoin’s role in sovereign and corporate reserve strategies a live policy question rather than a theoretical scenario.

Portfolio Design Across Liquidity Cycles

The coexistence of leverage-driven crashes and long-term debasement pressures forces investors to rethink how they allocate to Bitcoin across business and liquidity cycles. Portfolios that treat Bitcoin purely as a high-beta risk asset may be misaligned with its emerging function as a macro hedge, yet those that ignore structural volatility risk will remain vulnerable to forced liquidations. Over the medium term, more sophisticated frameworks that separate unlevered strategic holdings from tactically hedged or traded Bitcoin positions are likely to become standard practice.