Cryptocurrency prices could correct soon if Buffett is right

The Oracle of Omaha, whose opinion is seen by many as a barometer of economic health, notes that companies’ performance can decline, leading to inventory declines in the short term. This decline could lead to a correction in cryptocurrency prices due to NASDAQ’s correlation with cryptocurrencies.

Speaking at a Berkshire Hathaway shareholder meeting in Nebraska, Buffett said many companies will report lower earnings due to discounts after COVID-19 stockpiles build up.

The Oracle of Omaha expects lower earnings after dumping $13 billion into stocks

The Omaha Oracle predicted:

“In the overall economy, the feedback we’re getting is, I’d say, probably the majority of our business will actually report lower earnings this year than last year.”

Apple Inc. witnessed iPad, Mac and wearables revenue declined in the second quarter, despite iPhone revenue growing 2% year-over-year. The iPhone maker houses nearly half of the Berkshire empire’s stock portfolio.

Services, Apple’s second-largest segment after iPhone, experienced average growth for the third consecutive quarter. As a result, Apple’s total revenue dropped 3% annually, marking a decline in revenue for two consecutive quarters.

The earnings of Chevron Investment Corp. Berkshire in the first quarter under 40% of last year’s quarterly earnings. Analysts expect quarterly earnings of Occidental Petroleum to He falls 38% to $1.30 per share when it reports earnings later on Tuesday.

Berkshire increased its stake in the company earlier this year.

Berkshire Hathaway has $130.6 billion in cash after selling $13.3 billion in stock in the first quarter. It bought back some of its shares and invested $2.9 billion in other companies.

Interest rates boosted returns on treasury bills and bank deposits from $164 million last year to $1.1 billion this year.

Despite previous investments in Goldman Sachs and Bank of America, Buffet not revealed No intentions to help alleviate the current US banking crisis.

The NASDAQ correlation could lead the cryptocurrency to the downside

Charlie Munger, Business Partner of Buffet He said Last month investors should prepare for lower stock market returns amid rising interest rates.

Earlier this month, the Fed raised interest rates by 25 basis points to 5-5.25%, but hinted at a future pause.

The 30-day correlation between Bitcoin and the Nasdaq rose to about 0.5 at the end of April. This trace indicates that Buffet and Munger’s predictions of an economic slowdown could accompany the cryptocurrency’s slide.

A correlation coefficient closer to one means that the performance of Nasdaq and Bitcoin are almost exactly in line.

Bitcoin 30-day correlation with stocks, gold and the dollar | source: K33 Researthe chapter

Moreover, a larger downturn in the stock market will affect the performance of large-cap cryptocurrencies that follow Bitcoin.

BTC's relationship with ETH and BNB
BTC correlation with ETH and BNB | source: K33 research

Other macro pressures could drive down cryptocurrency prices, such as regulatory uncertainty in the United States discouraging institutional investment.

Despite getting a boost from the collapse of several US banks earlier this year, Bitcoin needs that investment to move beyond its current trading range, according to Kevin O’Leary.

Bitcoin has lost significant liquidity after the collapse of FTX and Alameda Research last year.

For the latest Bitcoin (BTC) analysis from BeInCrypto, click here.


Adhering to the Trust Project’s guidelines, BeInCrypto is committed to providing unbiased and transparent reporting. This news article aims to provide accurate and timely information. However, readers are advised to independently check the facts and consult with a professional before making any decisions based on this content.

Leave a Reply

Your email address will not be published. Required fields are marked *