Even After a 40% “Collapse”, Bitcoin Would Have Been Warren Buffett’s Best Investment Ever

Creatix / February 3, 2026

From recent highs, Bitcoin's price has dropped by roughly 40%, triggering the usual cycle of headlines—collapse, bubble, reckoning, finally exposed. To casual observers, this looks like confirmation of Bitcoin's failure. To long-term observers, it looks like a familiar chapter in a repeating story.

This is a revised version of a controversial statement that has gotten us into trouble in the past:

Even after this recent 40% drawdown, Bitcoin’s long-term return profile remains so extreme that a tiny allocation would have dwarfed the lifetime performance of one of the greatest investors who ever lived, Warren Buffett.

And Buffett's mistake wasn’t going “all in.” The mistake was not risking even less than 1% on Bitcoin.

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Bitcoin’s real history is not crashes — it’s compounding

Bitcoin is often discussed as if its history is a sequence of bubbles and crashes. That framing misses the deeper pattern.

From its early public trading years to today, Bitcoin has gone through:

repeated drawdowns of 30–80%
long periods of boredom and doubt
sudden repricings upward that permanently reset its floor

Zoom in, and it looks unstable. Zoom out, and it looks like one of the most asymmetric return machines ever observed in financial markets.

Let's focus on 2013. By then, Bitcoin had already done something extraordinary:

It had risen from pennies to around $100. That's right from pennies to $100!
That represented a huge increase and media attention exploded
“You’re too late” and "that's a scam" became the dominant narratives.

That moment matters, because it’s where most people mentally disqualify an asset.

So let’s start there.

The fair thought experiment: Buffett buys Bitcoin only after it was “obviously late”

Assume the following, conservatively:

Year: 2013
Bitcoin price: ~$100
Bitcoin price in early 2026 (after a recent 40% drawdown): ~$78,000

That means that even after the recent collapse, Bitcoin delivered:

~780× total return
~77,900% gain

This is not early-adopter math.
This is post-hype, post-visibility, post-20× math.

Compare that to Buffett’s actual masterpiece

Now compare Bitcoin to Berkshire Hathaway, arguably the most successful long-term investment vehicle in modern history.

From 2013 to 2026:

Berkshire Hathaway compounded at roughly 5×
That’s an excellent, elite result by traditional standards

But here’s where the story turns.

The 1% mistake: how little Buffett would have needed to risk

Let’s do the math cleanly.

Assume:

99% of capital stays in Berkshire’s traditional portfolio
1% is allocated to Bitcoin in 2013
Bitcoin returns ~780×
Everything else returns ~5×

Result:

That 1% Bitcoin allocation alone would have produced more than twice the total profit of the other 99% combined
Bitcoin would have accounted for the majority of total returns
Berkshire’s legendary businesses would still matter, but they would be numerically overshadowed

This is the key insight:

Bitcoin did not need to be a big bet to be a dominant one.

A fraction so small it could have been written off as an experiment would have rewritten the entire performance record. Buffett could have framed it and explained it as an experiment.

Why not taking that risk may be Buffett’s biggest mistake

This is not a criticism of Buffett’s intelligence. His record is above any possible criticism from us. The purpose is to frame a lesson for the rest of us. A lesson about frameworks. It is okay to be consistent, but it is also okay to be somewhat flexible. It is okay to be self-confident, but it is also okay to bet a little on the fact that we may be wrong.

Buffett’s philosophy is internally consistent:

Invest in cash-flow-producing businesses
Demand predictability
Avoid assets driven by narrative and volatility

Bitcoin violates every one of those rules. But history doesn’t grade investors on philosophical consistency. It grades them on outcomes. And in outcome terms, refusing even a 1% exposure to an asset with extreme convexity—after it was already mainstream—may stand as the largest opportunity cost of Buffett’s career.

Not because Bitcoin is “better” than businesses, but because:

upside asymmetry matters more than allocation size
small exposure to exponential systems beats large exposure to linear ones

What the recent 40% “collapse” really tells us

The recent drawdown feels dramatic because humans experience losses emotionally and gains mathematically.

A fall from six figures to the high five figures feels like destruction.
In long-term context, it is noise.

Bitcoin has always required holders to tolerate:

violent repricings
social ridicule
constant declarations of death

The volatility isn’t accidental.
It’s the price of admission.

And that volatility is exactly why institutions hesitate, even when the math is obvious.

What we can all learn from this

This isn’t about turning everyone into crypto maximalists.

The lesson is broader and more transferable:

You don’t need conviction to capture asymmetry
Small, disciplined exposure is enough.
The biggest risks are often psychological, not financial
Reputational fear blocks rational experimentation.
“Too late” is often just the beginning of exponential systems
Linear intuition fails in nonlinear worlds.
Avoiding small risks can create massive opportunity costs
Zero exposure is a decision, not neutrality.

The irony that keeps ironing

Even after a 40% collapse, Bitcoin still tells a story that traditional finance struggles to internalize:

The greatest missed opportunities are not the bold bets that fail,
but the tiny, survivable bets that were never made.

Warren Buffett built one of the greatest investment records in history.
And yet, history may remember that less than 1% of flexibility to think outside the box was all it would have taken to make it twice as great.

Now you know it.

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