Buffett Sold $13.3B in Equities

Buffett Sold $13.3B in Equities

Billionaire investor Warren Buffett's company, Berkshire Hathaway, sold off $13.3 billion worth of equities and invested more in cash and US Treasuries in Q1 2023, according to the company's latest earnings report. Buffett's move is seen as a signal of concern about the US economy's health, given Berkshire Hathaway's diverse portfolio. He warned that many of its businesses would report lower earnings this year than last year and expressed pessimism about the economy's future prospects.

Buffett Says "Incredible Period" Is Over

Buffett's optimism about the US economy, which he has credited for the success of his company in the past, has waned. He believes the "incredible period" for the US economy has ended over the past six months, which has led him to raise cash reserves to $130.6 billion in Q1 2023, the highest level since the end of 2021 when equities entered a bear cycle. 

Berkshire Prepares for a Potential Stock Market Crash 

Buffett's decision to increase cash reserves and invest in US Treasuries signals his preparation for a possible stock market crash, especially as the US banking crisis unfolds. Shares of many banks, such as PacWest Bancorp and Western Alliance Bancorp, have been dropping, making Buffett cautious about investing in risk assets.

Bitcoin Price Stays Correlated with Nasdaq

The increasing possibility of a global recession is putting downside pressure on Bitcoin, as its correlation with the Nasdaq reaches a new high. Bloomberg Intelligence analyst Mike McGlone believes that BTC price is likely to be the leading indicator for a stock crash. He also notes that the Fed is still tightening in May, which may portend a lose-lose situation for investors in risk assets.

Could Bitcoin Price Fall Below $25K Again?

Bitcoin's price has declined by roughly 6% over the past week, falling below its 50-day exponential moving average. Bitcoin bears are now eyeing $27,000 as the next downside target, and a decisive break below that level could pull BTC/USD down to its 200-day EMA near $24,600. 

Buffett's Warning for Forex Traders

Buffett's warning about a potential stock market crash and his move to invest more in US Treasuries could have an impact on forex trading. The increasing likelihood of a global recession and the Fed's tightening policies may lead to a decrease in demand for risk assets, including currencies of emerging economies. Moreover, Bitcoin's price, which has been correlated with Nasdaq, could decline further, leading to a fall in cryptocurrencies' values. Forex traders need to be cautious and watch out for possible changes in the market, particularly with regard to the US economy's health and the Fed's monetary policies.

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