Executive Summary
- Warren Buffett’s Berkshire Hathaway is projected to reach a record $350 billion cash holding by mid-2025, a historically bearish signal for the stock market and correlated assets like Bitcoin.
- Current market valuations, particularly in the tech-heavy Nasdaq, are significantly elevated, and Bitcoin’s strong correlation with the Nasdaq suggests it would be vulnerable to a market downturn.
- Despite Buffett’s cautionary signal, the recent re-acceleration of the US M2 money supply, which historically precedes Bitcoin price increases, could provide a counter-narrative and a potential tailwind for the cryptocurrency.
The Story So Far
- Warren Buffett’s Berkshire Hathaway is accumulating record cash holdings, historically signaling market caution and impending downturns, particularly amidst the current elevated equity valuations in the tech sector; however, the recent re-acceleration of the US M2 money supply presents a counter-narrative, as increasing liquidity has historically correlated with Bitcoin’s price surges.
Why This Matters
- Warren Buffett’s unprecedented $350 billion cash reserve signals a significant cautionary stance, historically preceding market downturns and suggesting that current equity valuations, particularly in the tech sector, are elevated, which could consequently impact Bitcoin given its strong correlation with the Nasdaq. However, this bearish outlook is balanced by the recent re-acceleration of the US M2 money supply, which historically has served as a tailwind for Bitcoin and could provide a counter-narrative if policymakers are compelled to inject liquidity to stabilize markets.
Who Thinks What?
- Warren Buffett’s Berkshire Hathaway is accumulating record cash holdings, which is historically interpreted as a cautionary signal for the stock market and Bitcoin, often preceding market downturns.
- Market analysts, citing data from Maverick Equity Research and The Kobeissi Letter, suggest current equity valuations, particularly in the tech sector, are elevated and show signs of market excess, indicating a potential downturn that would also impact Bitcoin.
- Analysts focusing on money supply, such as CryptoRodo, suggest that the recent re-acceleration of the US M2 money supply could provide a tailwind for Bitcoin, as increased liquidity has historically preceded rises in its value.
Warren Buffett’s Berkshire Hathaway is projected to reach an unprecedented cash holding of approximately $350 billion by mid-2025, with current holdings at $347.7 billion as of Q1 2025. This record accumulation, the largest among US public companies, is historically interpreted as a cautionary signal for the stock market, and by extension, for Bitcoin due to its strong correlation with tech equities like the Nasdaq.
Buffett’s Bearish Signal
Buffett’s strategy of increasing liquidity often precedes periods of market excess and subsequent downturns. His approach, famously described as being “fearful when everyone was greedy,” positions Berkshire Hathaway to acquire assets at lower valuations following market corrections.
Historically, Berkshire Hathaway significantly raised its cash positions before major market crashes. For instance, in 1998, cash holdings climbed to $13.1 billion, or 23% of total assets, just ahead of the Dot-Com bubble burst. Similarly, cash and equivalents reached $46.1 billion by Q1 2005, representing 51% of shareholder equity, preceding the 2008 financial crisis.
Elevated Equity Valuations and Bitcoin Correlation
The current market environment shows signs of elevated valuations, particularly in the tech sector. Data from Maverick Equity Research, cited by The Kobeissi Letter, indicates that the Nasdaq’s market capitalization has surged to 176% of the US M2 money supply, significantly surpassing its 131% peak during the Dot-Com era.
Furthermore, the Nasdaq now stands at 129% against the US GDP, nearly double its 2000 high of 70%. These metrics suggest that stock prices have advanced considerably faster than both the money supply and the broader economy.
Bitcoin’s price movements have shown a strong connection to the Nasdaq, with a 52-week correlation of 0.73. This high correlation suggests that a significant downturn in tech stocks, potentially signaled by Buffett’s caution, could similarly impact the leading cryptocurrency.
The Role of Money Supply Growth
Despite the cautionary signals, the ultimate trajectory of markets and Bitcoin may hinge on the rate of money supply growth. The US M2 money supply, which tracks liquid cash and deposits, has recently begun to expand again after a period of stagnation through much of 2025.
By July 2025, US M2 recorded a 4.8% year-over-year increase, reaching $22.1 trillion. This marks the fastest pace since early 2022, accelerating from a 2.4% growth rate earlier in the year.
Historically, an expanding money supply can be a boon for Bitcoin, particularly if policymakers are compelled to inject liquidity to support equity markets. This dynamic was evident post-2020, when Bitcoin surged from $3,800 to $69,000 as global M2 experienced significant expansion.
Analyst CryptoRodo further supports this view, stating that “Global M2 (money supply) has historically led Bitcoin by ~12 weeks,” implying that re-accelerating liquidity often precedes a rise in BTC’s value.
Warren Buffett’s record cash holdings present a significant signal of caution for both equities and the correlated cryptocurrency market. While historical patterns suggest a potential downturn, the recent re-acceleration of the US M2 money supply introduces a counter-narrative, indicating that increased liquidity could still provide a tailwind for Bitcoin, particularly if central banks intervene to stabilize markets.
