Buffett Turns to Cash as U.S. Economy Cools
Warren Buffett’s latest quarterly report from Berkshire Hathaway shows a significant move into cash and Treasurys. The firm sold $13.3 billion in equities during Q1 2023 while increasing cash reserves to $130.6 billion — the highest since 2021.
Buffett stated that most of Berkshire’s businesses would report lower earnings this year, noting that the “incredible period” for the U.S. economy is ending. With rising interest rates and banking sector turmoil, Buffett appears to be positioning for a potential downturn in risk assets.
Bitcoin’s Correlation With Stocks Raises Caution
Despite rallying 70% year-to-date, Bitcoin remains closely tied to equities. Its 100-week correlation with the Nasdaq stands near 0.42, reflecting shared market sentiment. Bloomberg’s Mike McGlone warned that if risk assets decline further, Bitcoin may lead the way down.
McGlone highlighted that both stocks and crypto have rallied within broader bear markets, noting the Federal Reserve’s tightening bias could trigger a “lose-lose” scenario for speculative assets.
Inflation and Fed Policy Remain Key Factors
Investors now await April’s Consumer Price Index data, expected to show persistent inflation at around 5%. Continued high inflation would reinforce the Fed’s hawkish stance, pressuring risk assets like Bitcoin.
However, futures markets suggest that rate cuts could arrive by early 2024 — a potential lifeline for Bitcoin if liquidity improves.
BTC Price Faces Key Support Levels
Bitcoin’s price fell below its 50-day exponential moving average at $27,950 and is now testing the $27,000 support level. A break below this threshold could push BTC toward the 200-day EMA near $24,600 — a 10% decline from current prices.
If Bitcoin rebounds above $27,000, it could retest resistance near $30,000, continuing its upward trend from early 2023.
