Buffett’s growing cash appetite has historically preceded stock market crashes.
Key takeaways:
Buffett’s growing cash appetite has historically preceded stock market crashes.
A potential Nasdaq downturn will likely pull down Bitcoin, too.
Warren Buffett’s Berkshire Hathaway raised its cash holdings to roughly $350 billion by mid-2025, combining Treasury bills and cash. That is an all-time high for the company and the largest among US public firms.
But what does this cash pile mean for Bitcoin (BTC), whose price has nearly doubled over the past year to a record $124,500 in August?
Buffett gets into cash before major stock crashes
Berkshire’s cash holdings in 2024–2025—reaching $347.7 billion (50.7% of shareholders’ equity, 28–30% of total assets) in Q1 2025—signal Buffett’s preparation for a potential market downturn.
Buffett has repeatedly raised liquidity during periods of market excess. Put differently, he has been fearful when everyone was greedy.
In 1998, he led Berkshire to cut stock exposure and lift cash holdings to $13.1 billion, about 23% of total assets.
By mid-2000, cash peaked near $15 billion, or 25% of assets, before Buffett reduced the position to buy bargains after the Dot-Com bubble burst.
Then Buffett again built up his cash pile. By Q1 2005, Berkshire’s cash and equivalents reached $46.1 billion, equal to 51% of shareholder equity, the highest level in that era and closest to current levels.
Cash remained elevated into 2007 at $44.3 billion, about 29% of total assets, just ahead of the 2008 financial crisis.
Overheated Nasdaq raises Bitcoin downside risks
Buffett’s caution looks more relevant given today’s equity valuations.
The Nasdaq’s market cap has surged to 176% of the US M2 money supply, well above the 131% Dot-Com peak, according to data from Maverick Equity Research sourced by The Kobeissi Letter.
Against the US GDP, the Nasdaq now stands at 129%, nearly double its 2000 high of 70%. These record readings highlight how far stock prices have outpaced both money supply and the economy.
Bitcoin has risen alongside the Nasdaq, with a 52-week correlation of 0.73. That means most of the time, the top crypto moves in the same direction as tech stocks.
Buffett’s record cash position highlights risks in equities and crypto because Bitcoin moves similarly to the Nasdaq.
Expanding M2 supply: Bitcoin top is not in?
However, how Buffett’s record cash pile and Nasdaq’s risks play out will ultimately depend on the rate of money supply growth.
The US M2, which tracks liquid cash and deposits, has started to expand again after flatlining through much of 2025. By July 2025, it rose 4.8% year-over-year to $22.1 trillion, the fastest pace since early 2022, according to FRED data.
Earlier in the year, growth was closer to 2.4%, showing momentum is picking up.
Globally, more than 20 central banks have cut rates in 2025, and forecasts suggest the Federal Reserve may follow with easing that could push annual M2 growth back toward 10–12%, according to economist Daniel Lacalle.
Historically, Bitcoin stands to benefit if US policymakers are forced to expand the money supply to defend equity markets.
Related: Bitcoin price target ‘sits around $170K’ as global M2 supply reaches record high
This is what happened post-2020, when BTC rose from $3,800 to $69,000 as global M2 ballooned.
“Global M2 (money supply) has historically led Bitcoin by ~12 weeks,” writes analyst CryptoRodo, adding:
“Every time liquidity re-accelerates, BTC eventually follows.”
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
