StanChart Suggests Bitcoin Could Boost 'Magnificent 7' Returns by Replacing Tesla

Bitcoin can be seen as fulfilling various roles within a tech portfolio, potentially encouraging greater institutional adoption, according to the bank's head of digital asset research.

Key Takeaways:

• A report from Standard Chartered argues that Bitcoin should be considered more like a tech stock than digital gold, given its stronger correlation with the Nasdaq.

• The report suggests reshaping the 'Magnificent 7' tech stocks by replacing Tesla with Bitcoin, which has historically led to higher returns and lower volatility over the past seven years.

• Some asset managers have supported adding Bitcoin to investment portfolios for diversification, with BlackRock advising an allocation of up to 2% in traditional stock and bond portfolios.

Although Bitcoin (BTC) is often regarded as a digital counterpart to gold, a recent report from global bank Standard Chartered suggests that investors should treat it more like a tech stock with additional advantages.

Geoff Kendrick and his team at Standard Chartered highlighted that Bitcoin's correlation with the Nasdaq has "almost always" been stronger than with gold, the traditional safe-haven asset. While BTC can serve as a refuge during financial instability—such as the 2023 regional banking crisis or concerns over U.S. debt—the report suggests that such hedging needs are rare, leading Bitcoin to behave more like a conventional tech stock.

"Investors can consider BTC both as a hedge against traditional finance and as part of their tech allocation," Kendrick noted. However, at least "in the short term, BTC may be better viewed as a tech stock than a hedge against issues in traditional finance," he added.

Exploring the idea of Bitcoin as part of a tech portfolio, the report proposed a restructured version of the "Magnificent 7" (Mag 7) stocks—major tech giants that have driven recent market gains, including Apple, Alphabet, Microsoft, Nvidia, Amazon, Meta, and Tesla. This revamped "Mag 7B" would replace Tesla with Bitcoin.

The outcome? According to Kendrick, the Mag 7B consistently delivered higher risk-adjusted returns than the original group over the past seven years, reinforcing Bitcoin's place in a tech-focused portfolio. On average, the Mag 7B outperformed the Mag 7 by about 1% annually while exhibiting nearly 2% lower volatility—a key advantage for institutional investors and large asset managers.

Mag7B return/volatility vs. Mag7 (Standard Chartered)

"BTC should be viewed as fulfilling multiple roles within investor portfolios, which could pave the way for increased institutional adoption," Kendrick stated.

Asset managers have been supporting Bitcoin's inclusion in investment portfolios for diversification. For instance, BlackRock, the world's largest asset manager, has suggested allocating up to 2% of BTC within traditional stock and bond portfolios. Additionally, firms like 21Shares and Bitwise have introduced exchange-traded funds (ETFs) that pair Bitcoin with gold, positioning them as complementary assets.