Key insights:
Buffett’s increasing cash reserves have historically signaled impending stock market declines.
A potential decline in the Nasdaq might also negatively impact Bitcoin.
By mid-2025, Warren Buffett’s Berkshire Hathaway increased its cash holdings to approximately $350 billion, encompassing Treasury bills and cash. This marks the highest figure in the company’s history and the largest among US public companies.
So, what does this substantial cash reserve imply for Bitcoin (BTC), which saw its price nearly double over the past year, reaching an unprecedented $124,500 in August?
Berkshire’s cash buildup ahead of stock market downturns
Berkshire’s cash assets in 2024–2025 reached $347.7 billion (50.7% of shareholders’ equity, 28–30% of total assets) by Q1 2025, indicating Buffett’s readiness for a possible market decline.
Buffett has a history of bolstering liquidity during market highs, being cautious when others are overly optimistic.
In 1998, he directed Berkshire to reduce stock exposure and increase cash on hand to $13.1 billion, around 23% of total assets.
By mid-2000, cash peaked at approximately $15 billion, or 25% of assets, before Buffett decreased this position to seize opportunities after the Dot-Com bubble collapsed.
Buffett then accumulated cash again. By Q1 2005, Berkshire’s cash and equivalents soared to $46.1 billion, equaling 51% of shareholder equity, the highest during that period and comparable to current levels.
Cash remained high at $44.3 billion in 2007, about 29% of total assets, soon before the 2008 financial crisis.
Overvalued Nasdaq heightens Bitcoin risk
Buffett’s caution resonates strongly amid current equity valuations.
The Nasdaq’s market capitalization has risen to 176% of the US M2 money supply, significantly exceeding the 131% peak during the Dot-Com bubble, per data from Maverick Equity Research as reported by The Kobeissi Letter.
Compared to US GDP, the Nasdaq is currently at 129%, nearly double its 2000 high of 70%. These unprecedented figures emphasize how drastically stock prices have surpassed both money supply and economic growth.
Bitcoin has experienced gains in tandem with the Nasdaq, exhibiting a 52-week correlation of 0.73. This indicates that Bitcoin often moves in the same direction as tech stocks.
Buffett’s unprecedented cash reserves illuminate risks in both equities and cryptocurrencies since Bitcoin mirrors the Nasdaq’s movements.
Rising M2 supply: Is the Bitcoin apex yet to come?
Ultimately, how Buffett’s substantial cash reserves and the Nasdaq’s risks are resolved will hinge on the growth rate of the money supply.
The US M2, which monitors liquid cash and deposits, has resumed its expansion after stagnating during much of 2025. By July 2025, it had increased 4.8% year-over-year to $22.1 trillion, marking the quickest growth since early 2022, according to FRED data.
Earlier in the year, growth hovered around 2.4%, indicating acceleration is underway.
On a global scale, over 20 central banks lowered interest rates in 2025, and forecasts suggest the Federal Reserve might follow suit, potentially driving annual M2 growth back to 10–12%, as indicated by economist Daniel Lacalle.
Historically, Bitcoin may gain if US policymakers feel compelled to expand the money supply to support equity markets.
Related: Bitcoin price target estimated at ‘around $170K’ as global M2 supply reaches all-time high
This occurrence mirrors the aftermath of 2020 when BTC surged from $3,800 to $69,000 in response to the soaring global M2 supply.
“Historically, global M2 (money supply) has led Bitcoin by approximately 12 weeks,” states analyst CryptoRodo, adding:
“Whenever liquidity accelerates, BTC eventually responds.”
This article does not provide investment advice or recommendations. Every investment and trading action carries risk, and readers should perform their own due diligence when making decisions.
