Many advocates of bitcoin (BTC) tend to perceive the leading cryptocurrency as a digital equivalent of gold. However, a recent analysis from a prominent global bank suggests that investors might benefit from viewing it more as a technology stock with additional advantages.
Authored by Geoff Kendrick and his team, the report points out that bitcoin’s correlation with the Nasdaq has consistently outperformed its connection to gold, the traditional safe haven. Although BTC can serve as a refuge during financial upheavals, such as the regional banking crisis of 2023 or the questionable trajectory of U.S. debt, the study indicates that such protective measures are infrequently necessary. As a result, bitcoin is increasingly acting like a conventional tech stock.
“Investors may see BTC as both a safeguard against conventional finance and as a component of their tech investments,” stated Kendrick. However, he noted that “in the near term, BTC might be more appropriately classified as a tech stock rather than a hedge for traditional financial concerns.”
Exploring the concept of bitcoin within a tech portfolio, the report suggested a reformulation of the index known as the Magnificent 7 (Mag 7) stocks—those major tech companies that have significantly influenced market performance recently: Apple, Alphabet, Microsoft, Nvidia, Amazon, Meta, and Tesla (TSLA). In this revised version dubbed “Mag 7B,” bitcoin would replace Tesla.
The analysis revealed that the Mag 7B yielded consistently superior risk-adjusted returns compared to the original group over the past seven years. This bolstered bitcoin’s position within a tech-centric investment portfolio, according to Kendrick, with the Mag 7B exceeding the performance of the Mag 7 by roughly 1% while exhibiting nearly 2% lower annual volatility—a crucial advantage for institutional investors and large asset managers.
“BTC should be regarded as fulfilling various roles in investment portfolios, potentially paving the way for greater institutional demand,” Kendrick emphasized.
Asset managers have been championing the inclusion of bitcoin in investment portfolios as a means of diversification. For instance, the world’s leading asset manager has suggested considering an allocation of up to 2% in BTC within traditional stock and bond portfolios. Simultaneously, firms like 21Shares and Bitwise have introduced exchange-traded funds (ETFs) that feature gold and bitcoin as complementary investments.