While Bitcoin’s proponents (BTC) commonly see the largest cryptocurrency as a digital version of Gold, a new Global Bank Standard Chartered report argued that investors should see it more as a technological action with some additional benefits.
Directed by Geoff Kendrick, Stanchart’s team said that Bitcoin’s correlation with the Nasdaq “almost always” has been stronger than with gold, the safe refuge asset of the old school. While BTC can have a role as a place to hide in cases of financial instability such as the regional banking crisis of 2023 or what could be the unsustainable debt trajectory of the United States, according to the report, the reality is that there is rarely a need for such hedges, therefore, it is an increasing behavior as a traditional technological stock.
“Investors can see BTC as a coverage against traditional finances and as part of their technological assignment,” Kendrick said. But, at least “in the short term, BTC can be better as a technological action than as a coverage against tradfi’s problems,” he added.
Playing with the idea of Bitcoin as part of a technology portfolio, the report proposed a remodeling of the index of the so-called Magnificent 7 actions (Mag 7): The technological names of Mega-Cap that have generated general returns of the market of recent times, Apple, Literacy, Microsoft, Nvidia, Amazon, Meta and Tesla (TSLA). This new “Mag 7B” would change to Tesla for Bitcoin.
The result? The MAG7B produced returns adjusted by the consistently higher risk than the original group in the last seven years, reinforcing the role of BTC in a technology -centered portfolio, Kendrick said. The MAP7B exceeded the MAG7 on average in around 1% with almost 2% lower volatility, a key benefit to institutional investors and large assets assignments, continued.
“BTC should be seen as a multiple service in investor portfolios. This would open the possibility of an even more institutional purchase,” Kendrick said.
Asset administrators have been advocating Bitcoin in investment portfolios for diversification purposes. For example, Blackrock, the world’s largest asset manager, recommended considering an allocation of up to 2% BTC in traditional shares of shares and bonds. Meanwhile, asset administrators such as 21Shares and Bitwise have launched funds quoted in exchange (ETF) that combine gold and bitcoin as complementary assets.
