Key Insights

• Warren Buffett’s increasing cash reserves have often signaled impending stock market downturns.

• A potential decline in the Nasdaq could negatively impact Bitcoin’s value.

Berkshire Hathaway, led by Warren Buffett, has combined Treasury bills with cash, achieving nearly $350 billion in cash assets by mid-2025. This is the highest amount ever recorded for the company and surpasses any other public U.S. corporation.

This raises a question: what implications does this vast cash reserve have for Bitcoin (BTC), especially since its price has approached an impressive $124,500 in August, nearly doubling over the past year?

Buffett’s Cash Strategy Before Market Crashes

By the first quarter of 2025, Berkshire’s cash holdings totaled $347.7 billion, representing about 50.7% of shareholder equity and 28-30% of total assets.

Buffett has consistently increased his liquidity during market excesses, often acting conservatively when others exhibit greed.

For instance, in 1998, he guided Berkshire to cut inventory and boost cash holdings to $13.1 billion, which was roughly 23% of total assets.

By mid-2000, cash reserves rose to nearly $15 billion, constituting about 25% of total assets. Following the dot-com bubble, Buffett lowered his cash reserves to capitalize on market bargains.

Again, he built up cash, and by early 2005, it reached $46.1 billion, forming 51% of shareholder equity—the highest level during that time.

Preceding the 2008 financial crisis, the cash reserves saw another increase to $44.3 billion until 2007, equivalent to around 29% of total assets.

Navigating an Overheated Nasdaq and Its Impact on Bitcoin

Buffett’s current cash holdings are particularly noteworthy in light of today’s stock valuations.

The Nasdaq’s market capitalization currently stands at 176% of the U.S. M2 money supply, which notably exceeds the dot-com peak of 131%, according to Maverick Equity Research.

Furthermore, the Nasdaq’s valuation compares unfavorably to U.S. GDP, surpassing the 2000 high of nearly 70%. These records indicate that stock prices are significantly outpacing growth in both money supply and the broader economy.

Bitcoin’s value has often mirrored the Nasdaq’s trajectory, evident in a strong correlation of 0.73 over the last year. In many instances, Bitcoin has moved in tandem with tech stocks.

Buffett’s substantial cash position emphasizes the potential risks facing both stocks and cryptocurrencies, particularly as Bitcoin tends to follow the Nasdaq’s trends.

Assessing Bitcoin’s Future Amid M2 Supply Trends

The eventual outcome for both Buffett’s cash reserves and the risks associated with the Nasdaq seems to hinge on the broader money supply growth rate.

The U.S. M2, which encompasses liquid cash and deposits, started to rise again following a period of stagnation in much of 2025. By July 2025, it had increased by 4.8% year-on-year, reaching $22.1 trillion—the fastest growth rate since early 2022.

At the start of the year, M2 growth was around 2.4%, suggesting an upward momentum.

Economists note that more than 20 central banks decreased their rates in 2025, suggesting the Federal Reserve is projecting annual M2 growth could rebound to around 10-12%.

Historically, Bitcoin tends to perform well when U.S. policymakers opt to expand the money supply to stabilize the stock market.

Since 2020, for example, Bitcoin skyrocketed from $3,800 to $69,000 as the Global M2 supply surged.

As noted by analyst Cryptorodo, “Global M2 has historically led Bitcoin by about 12 weeks.” So, when liquidity accelerates, Bitcoin is likely to follow suit.

This article does not constitute investment advice. All financial activities carry risks, and readers are encouraged to conduct thorough research when making decisions.