Bitcoin resembles tech stocks more than a market hedge

Bitcoin is currently seen more like a tech stock than a traditional financial hedge, according to a new report by Standard Chartered. The bank says that bitcoin's movements are closely linked to the Nasdaq stock index, rather than to gold. Right now, the correlation between bitcoin and the Nasdaq is about 0.5, while its connection to gold has dropped, sometimes reaching zero. Geoff Kendrick, who leads digital assets research at Standard Chartered, suggests that investors might be better off considering bitcoin as part of a group of major tech stocks. This shift could attract more institutional investors, as bitcoin would then have multiple roles in their portfolios. Historically, many have labeled bitcoin as "digital gold," believing it protects against financial risks. However, Kendrick points out that the need for such protections is rare. The bank introduced a new index called "Mag 7B," which includes bitcoin alongside popular tech stocks like Amazon, Apple, and Microsoft. This index has performed better than a group that excludes bitcoin since 2017. Kendrick notes that bitcoin has experienced volatility similar to other tech stocks, like Nvidia. Both have seen declines this year, but bitcoin's appeal may grow as it becomes more entrenched in investors' strategies. The report indicates that bitcoin has slight positive correlations with money supply growth and negative correlations with the U.S. dollar. Overall, bitcoin is down about 5% in value this year, largely due to market reactions to new tariffs introduced by former President Trump. However, expectations for recovery are growing as the second quarter approaches.