Bitcoin Viewed as Another Tech Trade by Standard Chartered

According to Standard Chartered, Bitcoin is still just another trade to Wall Street, grouped with tech stocks and traded accordingly. It gets picked up when it’s useful and discarded otherwise.

The bank reported that Bitcoin’s correlation with the Nasdaq is currently around 0.5, having reached up to 0.8 earlier this year. In contrast, its correlation with gold has collapsed, dropping to near zero from a previous correlation.

Geoff Kendrick, the global head of digital assets research at Standard Chartered, noted, “Bitcoin trading is highly correlated to the Nasdaq over short time horizons.” Therefore, he suggests that Bitcoin should be viewed as part of the big tech trade. Kendrick further stated, “If included in a tech basket, we would likely see increased institutional buying as BTC serves multiple purposes in investor portfolios.”

This view isn’t new; Wall Street’s perspective on crypto often shifts rapidly, alternating between seeing it as a tech investment and a hedge against traditional systems. Kendrick acknowledged the hedge aspect, saying, “In reality… the need for such hedges is very infrequent.”

Standard Chartered’s New Index: Mag 7B

Standard Chartered introduced an index named Mag 7B, which includes the Magnificent 7 tech stocks—Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and replaces Tesla with Bitcoin.

Kendrick claimed the Mag 7B has outperformed the traditional Mag 7 by about 5% since December 2017, boasting consistent, albeit small, gains. Over time, Bitcoin’s volatility has been compared to Nvidia’s, revealing that both have experienced significant price drops recently, while Tesla has suffered even more.

Kendrick mentioned, “Investors can view Bitcoin as both a hedge against traditional finance and as part of their tech allocation,” emphasizing its evolving role in investment portfolios, particularly as it gains institutional acceptance.

Economic Impact of Trump’s Tariffs

Amidst the backdrop of renewed tariffs by Trump, Bitcoin has experienced a 5% drop this year. Standard Chartered observes that Bitcoin often reacts to macroeconomic changes; it rises with increasing money supply (M2) and falls when the U.S. dollar index (DXY) ascends.

Traders are hopeful for a rebound as they await further clarity on tariffs, but market responses remain uncertain due to mixed signals from the White House.

Morgan Stanley’s Market Outlook

Meanwhile, on the same day, Morgan Stanley’s Mike Wilson described the current market recovery as a “low-quality rally.” He attributed this to short-term technical factors and predicted the S&P index could reach around 5,900 before hitting resistance.

Despite a strong market start, with the S&P 500 up 1.8% and nearing its record high, Wilson is skeptical about sustaining the momentum, citing various fundamental issues affecting market performance rather than tariffs. He believes volatility will persist, forecasting a more durable low later in the year.

At press time, Bitcoin was valued at $87,722.