Bitcoin as a Tech Stock

Given the Bitcoin price’s high correlation with the Nasdaq, investors should treat it more like a tech stock rather than a hedge against market volatility, according to Standard Chartered analyst Geoff Kendrick.

To test this theory, Kendrick created a hypothetical “Mag 7B” index that replaces Tesla with Bitcoin in the Magnificent 7 index, which typically consists of tech giants Apple, Microsoft, Nvidia, Amazon, Alphabet, Meta, and Tesla. He concluded that traders would be up 5% now if they had made this swap in 2017.

Bitcoin’s $1.7 trillion market capitalization makes it the sixth largest in this group. Bitcoin has seen slight retracement after nearing $88,000, but it gained 3.7% in the last 24 hours according to CoinGecko data.

Traders are feeling less uncertain, as evidenced by a more than 10% increase in open interest for Bitcoin futures contracts in the past day, amounting to $57 billion. Earlier in the month, this figure had dropped to $45 billion amid market volatility due to President Trump’s tariff issues. As macroeconomic concerns have eased, traders are increasingly ready to invest in BTC.

Kendrick’s analysis shows that if Bitcoin had been included in the adjusted Mag7 index starting in 2017, it would have outperformed Mag7 by about 5%. Additionally, those who swapped Bitcoin with TSLA over the past seven years experienced fewer price fluctuations.

Kendrick notes that Mag 7B demonstrates lower annualized volatility compared to Mag 7. Over the full period, the average annualized volatility is almost 2% lower for Mag 7B.

The correlation between Bitcoin and stocks remains a debated topic among investors. Interestingly, in the last quarter of 2024, BTC seemed to break away from gold and equity markets to outperform all asset classes, as noted by NYDIG. Furthermore, since President Trump’s inauguration, BTC has traded similarly to most Mag 7 stocks. Kendrick observes that when comparing price declines against volume levels, BTC has acted more like NVDA, while TSLA behaves more like ETH.