Key insights:
Buffett’s increasing cash reserves have historically signaled impending stock market crashes.
A potential decline in the Nasdaq may also negatively impact Bitcoin.
By mid-2025, Warren Buffett’s Berkshire Hathaway elevated its cash holdings to approximately $350 billion, incorporating cash and Treasury bills. This represents a record high for the company and the largest among publicly traded US firms.
What implications does this substantial cash reserve hold for Bitcoin (BTC), which reached an all-time high of $124,500 in August after nearly doubling in price over the past year?
Buffett amasses cash before significant market downturns
In Q1 2025, Berkshire’s cash reserves totaled $347.7 billion (50.7% of shareholders’ equity, 28–30% of total assets), indicating Buffett’s readiness for a possible market decline.
Historically, Buffett has increased liquidity during market surges, often anticipating downturns when market sentiment is overly optimistic.
In 1998, he guided Berkshire to reduce stock investments while boosting cash holdings to $13.1 billion, about 23% of total assets.
By mid-2000, cash reached around $15 billion, or 25% of assets, before Buffett utilized the funds to acquire undervalued assets after the Dot-Com bubble burst.
Once again, Buffett increased his cash reserves. By Q1 2005, Berkshire’s cash and equivalents peaking at $46.1 billion represented 51% of shareholder equity, the highest in that period and comparable to current levels.
Cash levels remained high into 2007 at $44.3 billion, about 29% of total assets, shortly before the 2008 financial crisis.
Overheated Nasdaq heightens Bitcoin risks
Buffett’s caution seems particularly pertinent given current equity valuations.
The Nasdaq’s market capitalization has surged to 176% of the US M2 money supply, surpassing the 131% peak seen during the Dot-Com era, according to data from Maverick Equity Research cited by The Kobeissi Letter.
The Nasdaq now stands at 129% of US GDP, almost double the 70% level of 2000. These unprecedented figures illustrate how significantly stock prices have outstripped both the money supply and the economy.
As Bitcoin has risen alongside the Nasdaq, there exists a 52-week correlation of 0.73—meaning the leading cryptocurrency often mirrors the movement of tech stocks.
Buffett’s substantial cash reserves underscore potential vulnerabilities in both equities and cryptocurrencies, as Bitcoin tends to move in tandem with the Nasdaq.
Increasing M2 supply: Is the Bitcoin peak yet to come?
The future implications of Buffett’s massive cash holdings and the associated risks of the Nasdaq will ultimately hinge on the growth rate of the money supply.
The US M2, which measures liquid cash and deposits, has begun to rise again after remaining stable for most of 2025. By July 2025, it increased by 4.8% year-over-year to $22.1 trillion, marking the swiftest growth since early 2022, according to FRED data.
Earlier this year, the growth rate was around 2.4%, suggesting an upward momentum is building.
On a global scale, over 20 central banks have lowered interest rates in 2025, with forecasts indicating that the Federal Reserve may soon follow suit, potentially driving annual M2 growth back toward 10–12%, as per economist Daniel Lacalle.
Historically, Bitcoin tends to thrive when US policymakers are compelled to expand the money supply to support equity markets.
Related: Bitcoin price target estimated at ‘around $170K’ as global M2 supply hits all-time high
This pattern was evident post-2020, when BTC surged from $3,800 to $69,000 as global M2 expanded.
“Historically, global M2 (money supply) has led Bitcoin by about 12 weeks,” analyst CryptoRodo stated, adding:
“Liquidity re-acceleration invariably results in BTC following suit.”
This article does not provide investment advice or recommendations. All investment and trading activities carry risk, and readers are encouraged to conduct their own research when making decisions.
