Bitcoin: A Tech Stock in Disguise?
Bitcoin (BTC) is evolving beyond its traditional role as a hedge against financial instability, according to a recent analysis from Geoffrey Kendrick, head of digital assets research at Standard Chartered. Kendrick’s research suggests that Bitcoin is increasingly aligning with high-growth technology assets, potentially warranting its inclusion in tech-focused investment strategies.
In a report shared with CryptoSlate on March 24, Kendrick proposed a reconfiguration of the “Magnificent 7” tech stock index, a benchmark of leading technology companies. His suggestion involved replacing one of the index’s existing components — Tesla — with Bitcoin, and he argued that this adjustment would improve the index’s overall performance. This proposal highlights a shift in perception, potentially positioning Bitcoin within a mainstream investment framework.
Testing the Thesis: The Mag 7B Index
To test this hypothesis, Kendrick and his team created a revised index. The team created the ‘Mag 7B’ index, removing Tesla and including bitcoin. According to the report, the Mag 7B index consistently outperformed the original tech index from 2020 to 2024, measured by return-to-volatility ratios. The analysis suggests that in addition to being a hedge against traditional finances, investors could allocate Bitcoin as part of their existing tech holdings.
The Standard Chartered report stated:
“We find that our index, ‘Mag 7B’, has both higher returns and lower volatility than Mag 7. This suggests that investors can view BTC as both a hedge against TradFi and as part of their tech allocation.”
Institutional Adoption and Market Dynamics
Kendrick’s analysis points to several key factors supporting this evolving view. Bitcoin’s increasing role in global portfolios is gaining traction, due in part to a rising tide of institutional investment, as the report notes. This trend aligns with the growing acceptance following the U.S.’s approval of spot Bitcoin ETFs.
“As BTC’s role in global investor portfolios becomes established, we think that having more than one use will bring fresh capital inflows to the asset. This is particularly true as Bitcoin investment becomes more institutionalised.”
While the report identifies Bitcoin’s potential as a medium-term hedge against risks in the traditional financial system (TradFi), such as the 2023 collapse of Silicon Valley Bank, it also emphasizes the correlation between Bitcoin and the Nasdaq over shorter time frames.
“Over the medium-term I see Bitcoin as a hedge against TradFi issues… But over shorter time horizons it trades very much like the Nasdaq.”
Market Outlook: A Favorable Environment
The timing of this analysis may be propitious, with Kendrick anticipating a positive market response to a “less bad” US tariff announcement. He also noted that the first quarter of 2025 for the Nasdaq was its worst since the second quarter of 2022. Such a rebound could particularly benefit Bitcoin, given its growing integration within tech-focused assets. Both the anticipated relief in tariff news and the broader tech optimism could drive up demand.
Kendrick’s outlook for the short term appears optimistic:
“I would expect this week to be a good one for Bitcoin and all things crypto… Higher Nasdaq will equal higher Bitcoin. 90k in focus now.”
However, Standard Chartered maintains that a greater catalyst is needed for sustained rallies and new highs for Bitcoin. Kendrick’s analysis highlights a growing recognition of Bitcoin’s dual nature as both a hedge in traditional finance and a high-beta tech asset, which positions Bitcoin as a possible long-term component of global investment strategies.
