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Buffett Indicator Signals Danger, Is a Bear Market Inevitable?**
Warren Buffett's legendary valuation indicator has once again shown the greatest danger sign since the dot-com era. The total market capitalization ratio of US stocks to GDP has soared to 233.7%, indicating that the market is far above its fair economic value.
According to Gieger Capital, Buffett has previously stated that if this ratio approaches 200%, investors are playing with fire. Now it has even surpassed that threshold, putting the market at risk of entering a sharp correction phase or a prolonged bear market.
This warning signal is starting to appear in the crypto asset market, which has already lost around US$790 billion since October. The crypto market capitalization has fallen from US$4.22 trillion to US$3.43 trillion, erasing all gains since early 2025.
On the other hand, while global investors are busy chasing digital assets, technology stocks, and AI, Buffett has been increasing his allocation to T-bills and stacking cash of more than US$382 billion.
Buffett likes T-bills for their liquidity and the ability to be quickly liquidated, allowing him to buy more stocks when the market is down.
Buffett has also increased his cash pile to reach US$382 billion without directly placing it into specific assets. Many analysts believe this move indicates he is waiting for a massive market correction.
"When others are greedy, I am cautious. But when many are fearful, that's when I am willing to take risks," Buffett said.