Bitcoin News Today: Bitcoin's Surge Forces Reckoning with Buffett's S&P 500 Strategy

Warren Buffett's long-standing advocacy for the S&P 500 as a cornerstone of long-term investing has faced a striking challenge in recent years. While the index has delivered a 106% return in U.S. dollar terms since 2020, its performance in Bitcoin terms has been sharply negative, with a reported 88% decline over the same period. This divergence highlights the evolving dynamics between traditional equities and digital assets, as Bitcoin's meteoric rise has outpaced the S&P 500's gains in both absolute and relative terms. A $100 investment in the S&P 500 since 2020 would now be worth approximately $209.85, whereas the same amount invested in Bitcoin would have surged to $1,473.87 as of July 2025How Bitcoin Price - S&P 500 Correlation Could Shape Its Next Move^[5].

Buffett's preference for the S&P 500, often paired with a 90/10 allocation strategy (90% in the index and 10% in short-term U.S. Treasury bonds), has been rooted in its historical resilience and diversified exposure to leading U.S. companies. However, Bitcoin's performance has underscored its distinct risk-return profile. The cryptocurrency's limited supply and decentralized nature have positioned it as a potential hedge against inflation and fiat depreciation, though its volatility remains a critical differentiator. As of October 2025, Bitcoin reached an all-time high of $125,700, while the S&P 500, despite hitting record levels in dollar terms, has seen its value eroded by over 88% when measured in BTC.

The correlation between Bitcoin and the S&P 500 has fluctuated significantly, reflecting broader macroeconomic trends and institutional adoption. Over the past year, Bitcoin exhibited a 76% correlation with the NASDAQ 100 and a 92% correlation with the S&P 500 in certain periods, particularly during risk-on market cycles. This alignment has been driven by factors such as Federal Reserve rate cuts, which have spurred liquidity into both equities and crypto markets. However, recent events, including the Bybit hack and regulatory uncertainties, have highlighted crypto-specific risks that can temporarily decouple Bitcoin from traditional assets.

The growing institutional interest in Bitcoin has further reshaped its relationship with the S&P 500. Traditional financial firms, including Morgan Stanley and Standard Chartered, have launched crypto trading and custody services, signaling a shift toward mainstream acceptanceMorgan Stanley to Launch New Crypto Asset-Allocation Strategy^[1]. These developments have bolstered liquidity and reduced Bitcoin's volatility relative to equities, though its role as a diversification tool remains debated. Analysts note that while Bitcoin's correlation with equities has increased, its unique characteristics-such as its decentralized supply and exposure to regulatory shifts-ensure it retains a distinct risk profileBitcoin (BTC) Price: Hits New All-Time High as Exchange Balances Drop to Six-Year Low^[6].

For investors, the S&P 500's underperformance in BTC terms raises questions about portfolio allocation strategies. While Buffett's approach emphasizes stability and compounding returns, Bitcoin's rapid appreciation has attracted those seeking higher growth potential. However, the cryptocurrency's volatility and regulatory risks necessitate careful risk management. The recent surge in exchange-traded products (ETPs) and institutional-grade custody solutions may further integrate Bitcoin into traditional portfolios, though its long-term role as a "digital gold" asset hinges on its ability to decouple from equities during macroeconomic shifts.

The data underscores a pivotal moment in asset allocation, where the S&P 500's dominance as a safe-haven investment is being challenged by Bitcoin's disruptive potential. As institutional adoption accelerates and regulatory frameworks evolve, the interplay between these two asset classes will likely remain a focal point for investors and analysts alike.