I'm guessing that is what is going on. I did the paper towel routine and then planted them in some jiffy pucks. I put the pucks in the 5 gallon containers thinking it would hold the moisture better...maybe not a good idea.
Here is what I do... I put a party cup with drain holes IN my final container. Plant your seeds in the party cup. Now you only need to water the cup itself. If you use a clear cup you can monitor your root growth just by lifting out your cup. When it's time to transplant them it's painless since you already have the same size indentation in your soil.
Yes, I do have drainage holes in the five gallon buckets. My plants aren't doing jack shit right now. I don't get it!