Main Points ：
- Berkshire Hathaway’s cash and Treasury bills reached an unprecedented ~$350 billion by mid‑2025, signaling Buffett’s defensive stance.
- Historically, Buffett’s cash surges preceded major market crashes (2000, 2008).
- Nasdaq’s valuation now towers at 176 % of U.S. M2 and 129 % of GDP, far exceeding past peaks.
- Bitcoin, with a 0.73 correlation to Nasdaq and a price high of ~$124,500, may be vulnerable to a Nasdaq correction.
- However, an accelerating M2 money supply could inject liquidity and support crypto prices.
- A 5 % allocation of Berkshire’s cash to Bitcoin in early 2025 could have netted approx. $850 million—an opportunity missed under Buffett’s caution.
- Leadership transition to Greg Abel maintains Buffett’s cautious philosophy but raises questions about future capital deployment.
Introduction
Berkshire Hathaway, under Warren Buffett’s stewardship, has amassed a staggering cash and cash-equivalent pile of around $350 billion by mid‑2025—the largest among U.S. public companies. This accumulation extends beyond mere financial metrics; it offers a lens into Buffett’s cautious market outlook and may serve as a bellwether for both equity and crypto markets.
Figure 1: Berkshire Hathaway’s cash holdings have surged to unprecedented levels by Q1 2025.
Historical Precedents: Buffett’s Cash Buildup Before Crashes
Buffett has a well-documented pattern: he accumulates cash when markets exhibit excessive greed. His company’s cash-to-assets ratio spiked notably in:
- 1998, when cash reached ~$13 billion (~23 % of assets), pre‑dot‑com crash.
- 2000, with cash near ~$15 billion (~25 %), followed by opportunistic buying post-crash.
- 2005 Q1, peaking at ~$46 billion (~51 % of shareholder equity), before the 2008 financial crisis unfolded.
- By Q1 2025, cash stood at ~$347.7 billion—roughly 50.7 % of equity and 28–30 % of total assets—echoing those prior cautionary periods.
Valuation Excess in Equities: Nasdaq at Bubble Levels
Markets appear overstretched. According to Maverick Equity Research, the Nasdaq’s market capitalization has ballooned to 176 % of U.S. M2 money supply, eclipsing the dot-com peak of 131 %. In GDP terms, Nasdaq stands at 129 % of U.S. GDP, nearly double its 2000 level.
Bitcoin in the Crosshairs
Bitcoin (BTC) has mirrored Nasdaq’s trajectory. With a 52‑week correlation coefficient of 0.73, crypto tends to follow tech-heavy movements. Having nearly doubled to a high of $124,500 in August 2025, Bitcoin’s fate may hinge on equity stability.
Money Supply Growth: A Potential Lifeline
M2 money supply growth is accelerating—from around 2.4 % early in 2025 to 4.8 % year-over-year by July, the strongest pace since early 2022. Economists, including Daniel Lacaille, believe further Fed easing could drive M2 growth to 10–12 %, potentially fueling asset rallies—including Bitcoin—if liquidity returns.
Missed Crypto Gains: The Cost of Caution
While Buffett critics argue his cash-heavy stance may have limited upside, consider this: if Berkshire had allocated just 5 % of its cash (~$5 billion) into Bitcoin early in 2025, it could have earned around $850 million by August, given Bitcoin’s gains. Yet Buffett has consistently dismissed Bitcoin as “rat poison squared,” citing lack of yield and intrinsic value—a position that appears increasingly conservative in hindsight.
Leadership Transition and Future Strategy
Buffett has announced his retirement as CEO by the end of 2025, with Greg Abel stepping in, while Buffett remains chairman. Abel echoes Buffett’s high-quality, disciplined investment ethos and defends holding cash as a strategic buffer during downturns, though investors hope for more proactive capital deployment amid the massive cash reserves.
Summary and Outlook
Buffett’s unprecedented cash hoard signals a defensive posture amid elevated market valuations. Bitcoin’s close historical correlation with Nasdaq leaves it exposed should equities falter. Yet, resurging money supply growth could revive risk markets, including crypto. The transition to Greg Abel may preserve Buffett’s philosophy but raises questions about future deployment of the massive cash buffer. For investors exploring new crypto opportunities or practical blockchain applications, the current environment underscores the importance of balancing caution with agility—keeping capital dry when needed, but ready to act when value emerges.
