Why Bitcoin Merits Consideration in your Portfolio

“The tendency of our government to want to debase its currency
over time, there’s no system that beats that.”

Warren Buffett, 2025 Berkshire Hathaway Annual Meeting

What Warren Buffett Said at the 2025 Berkshire Hathaway Meeting

As many readers will know, Warren Buffett recently announced his intention to step
down as CEO of Berkshire Hathaway at the end of 2025, concluding a legendary 60-
year tenure.

Yet among the farewells and reflections, one overlooked segment of Buffett’s speech
stood out — his candid thoughts on money.

In his remarks, Buffett expressed deep concern over the persistent tendency of
governments, including the US, to erode the value of their currencies over time. He
made it clear that this issue isn’t isolated to America, it’s a global phenomenon. He
further noted that ongoing fiscal deficits are not sustainable and warned of the
potentially severe economic consequences.

(For those interested, Buffett’s full comments are available via the video link below.
Skip to the 3:10 mark in this seven-minute video for the segment on currency.)

Warren Buffett on why U.S. fiscal policy scares him

In this article, I explore the case that Buffett’s fears are not only justified, but that
there is a viable way for investors to protect themselves - by considering Bitcoin as
part of their investment portfolios.

How Much Value Has Money Lost?

"The natural course of government is to make the currency worth
less over time and that’s got important consequences."
— Warren Buffett, 2025 Berkshire Hathaway Annual Meeting

To illustrate how the value of money has dramatically fallen in value over time,
consider how the US dollar has collapsed when priced in gold since the beginning of
the twentieth century. (Of course, no graph exists for Bitcoin over this period).

Devaluation of USD vs Gold from 1900 to 2025 (source PricedInGold.com)

Note that in the 1930s, the reaction to the US government’s decision to devalue the
dollar, following the Great Depression, by increasing the official price of gold and in
August 1971, US President Richard Nixon’s decision to suspend the convertibility of
the US dollar into gold following the breakdown of the Bretton Woods system (known
as the "Nixon Shock"). Both resulted in sharp falls in the value of the dollar.

Furthermore, the relative value of the dollar in gold terms when valued from a 1900
basis has fallen almost to zero.

Why Not Just Buy Gold Then?

It is true that gold has a long-standing reputation as a store of value, and deservedly
so. But in the digital era, Bitcoin offers several important advantages.

Firstly, Bitcoin is not just sound money; it’s superior money technology. As economist
John Maynard Keynes once famously called gold a “barbarous relic,” the description
seems even more fitting today. Bitcoin is digital-native, borderless, and easy to
transfer—features that make it more suitable for a modern, interconnected world.

Secondly, Bitcoin’s monetary policy is hardcoded, predictable, and transparent. Its
supply is capped at 21 million “coins”, with issuance halving every four years. This
means Bitcoin’s long-term inflation rate trends towards zero (and will eventually
reach zero). Gold, in contrast, sees supply fluctuations due to mining activity and
central bank actions, typically expanding around 1.5–2.0% per year.

Unlike fiat currencies or gold, both of which are often managed, stored, or
manipulated by central authorities, Bitcoin is decentralised. No government or
institution can unilaterally change its supply.

Moreover, Bitcoin enables unprecedented portability of capital. A memorised seed
phrase (usually 12–24 words) can allow an individual to move substantial wealth
across borders — a crucial advantage in times of crisis, political instability, or high
inflation, again a distinct edge over physical and bulky gold.

From an investment perspective, Bitcoin has historically shown low correlation with
traditional asset classes, enhancing diversification benefits. More significantly, it
remains in its adoption phase, offering meaningful potential upside ahead as global
understanding and usage increase.

And the performance? Since its inception, Bitcoin’s price trajectory has been
unmatched. From less than one cent in 2009, at the time of writing it now trades
above US$100,000 per coin. Whilst volatility remains high, the long-term trend is up
and to the right, underscoring its disruptive power and untapped potential.

In short, Bitcoin builds upon many of gold’s virtues, while also addressing many of its
limitations. For investors looking to hedge against fiat currency devaluation (aka
inflation), Bitcoin offers a compelling alternative. This is not to discount gold entirely,
but rather to highlight that Bitcoin offers a compelling, modern alternative fit for
purpose in the new digital economy.

To illustrate the point further, the graph below shows how the value of Bitcoin has
increased in value against the US dollar since 2010.

Bitcoin Price versus US Dollar (Source: BitBO)

Strategic Adoption: Nations and Corporates Move In

Bitcoin is increasingly being treated as a serious strategic asset.

In March 2025, the US government formalised the creation of a Strategic Bitcoin
Reserve via an executive order under President Trump. This move positions Bitcoin
as a form of "digital gold"; to strengthen economic resilience through its scarcity and
decentralisation. The initiative is part of a broader digital-friendly policy framework,
including lighter regulation and the appointment of Bitcoin advocate David Sacks to a
senior advisory role.

Globally, other nations are starting to follow suit, examples of which include:

• Brazil recently (March 2025) launched a sovereign Bitcoin reserve to diversify
  its holdings and strengthen independence from the US dollar. The aim is to
  allocate up to 5% of its international reserves in Bitcoin.
• Russia has begun using domestically mined Bitcoin for international
  transactions.
• A growing number of countries are exploring Bitcoin’s role as a reserve asset
  to hedge against US dollar reliance and economic shocks.
• On the corporate side, Strategy (formerly MicroStrategy) continues to lead in
  Bitcoin treasury adoption, having built its holding from since 2020. This model
  is now being followed by others.
• In May 2025, GameStop acquired 4,710 bitcoins, marking its first major
  Bitcoin initiative. Meanwhile, Japanese firm Metaplanet also added Bitcoin to
  its balance sheet as a strategic reserve.

These developments signal a significant shift in general Bitcoin adoption: And Bitcoin
is increasingly viewed as one of the building blocks of strategic financial planning—at
both national, corporate, and individual levels.

How Much Bitcoin is “the Right Amount”?

Of course, there is no one or universal “right” potential allocation to Bitcoin that
applies to all. Everyone has different needs, risk profiles, time horizons and other
factors. However, it is illustrative to see how traditional asset allocations are currently
constructed and how they may change as a framework for discussion.

Surprisingly, most traditional investment portfolios, such as diversified
superannuation funds, currently allocate nothing to gold, let alone Bitcoin. But as
perceptions change and general Bitcoin adoption continues to increase, I believe
institutional demand and Bitcoin allocations will drive the Bitcoin price significantly
higher.

To get a feeling for the status quo and how even small future allocations to Bitcoin
could change demand, consider this chart from the Association of Superannuation
Funds of Australia (ASFA), showing asset allocations across all Australian super
funds as of June 2024 (the last reported financial year).

Australian Superannuation System-wide Asset Allocation
(source: ASFA per latest FYE – June 2024)

The appropriate Bitcoin allocation depends on an investor's personal financial
circumstances, risk tolerance, understanding of the asset class and investment
horizon, among other factors.

Unlike many traditional asset classes, Bitcoin is still considered high risk (despite its
historical performance) and has high volatility. That’s why it's important to consult a
suitably qualified and experienced financial advisor before making any investment
decisions.

Two crucial considerations include:

• Willingness to bear risk: Can you emotionally and psychologically handle
  the sharp ups and downs in price?
• Ability to bear risk: Can your financial situation support the potential of
  losses on your investment?

Many investors start by allocating a small percentage, commonly between 1% and
5%, of their portfolio to Bitcoin. This approach offers potential significant upside
exposure while keeping risk manageable.

Crucially, do your own research. Learn how Bitcoin works, its technical foundations,
and its economic implications. This will strengthen your conviction—or help you
decide it’s not right for you.

Bitcoin may not be for everyone. No asset class is. But for those who understand
and believe in its thesis, even a modest allocation may be worth considering.

Conclusion

Warren Buffett’s comments at the 2025 Berkshire Hathaway meeting shine a
spotlight on an enduring concern: the persistent devaluation of fiat currencies. While
gold has historically served as a hedge against this trend, Bitcoin represents a
modern evolution of sound money principles, tailored for the digital age.

It combines scarcity, decentralisation, portability, and security, whilst also offering
exposure to a growing network that is still in its early stages of global adoption.
These features make it a unique asset class worth considering for those seeking
protection from monetary debasement whilst benefitting from the potential upside
from increased adoption.

That said, Bitcoin is not a guaranteed path to wealth, nor may it be suitable for every
investor. There are no absolute guarantees in life. The decision to include Bitcoin in
your portfolio should be based on thorough research, honest risk assessment, and
personal financial goals.

Most importantly, and as highlighted earlier, consult a suitably qualified and
experienced investment advisor before making any decision. A professional can help
you determine whether Bitcoin may have a place in your strategy and if so, how
much is appropriate for you.

Guest Writer: Vincent Wales 

About the author:

Vincent Wales holds the Chartered Financial Analyst (CFA) and Chartered
Accountant (CA) designations and holds a Master of Finance (MAppAc) from the
University of London. With a career spanning investment management, investment
advisory services, and superannuation. He brings a thoughtful, research-driven
perspective to modern investment challenges.

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