According to Standard Chartered analyst Geoff Kendrick, Bitcoin’s price closely mirrors that of tech stocks like those in the Nasdaq, suggesting investors should view it as a tech asset rather than a classic hedge against Market volatility. Kendrick created a “Mag 7B” index, swapping Tesla for Bitcoin, and found that including Bitcoin since 2017 would have resulted in a 5% higher return and less volatility compared to the original index. Currently with a Market cap of $1.7 trillion, Bitcoin remains a significant player alongside major tech giants. Recent data shows increased trading confidence, with open interest in Bitcoin futures rising significantly, indicating a shift towards positivity in the Market.
Bitcoin’s Rise Mirrors Tech Stocks, Says Analyst
According to Standard Chartered’s analyst Geoff Kendrick, Bitcoin is increasingly behaving like a tech stock rather than serving as a safe haven against Market volatility. This claim is backed by strong correlations between Bitcoin and the Nasdaq index, suggesting that investors should rethink their strategies for cryptocurrencies.
Kendrick has introduced a new hypothetical index called “Mag 7B,” which replaces Tesla in the Magnificent 7 index with Bitcoin. The original Magnificent 7 includes tech giants like Apple, Microsoft, Nvidia, Amazon, Alphabet, Meta, and Tesla. If Bitcoin had been part of this index since 2017, Kendrick suggests that investors would have enjoyed a 5% gain, indicating that Bitcoin could have outperformed traditional tech stocks over the years.
Currently, Bitcoin’s Market capitalization stands at $1.7 trillion, making it the sixth largest in the modified index. Despite a recent slight decline after nearing the $88,000 mark, Bitcoin has rebounded with a 3.7% gain in the last 24 hours, as reported by CoinGecko.
Open interest in Bitcoin futures has also surged, climbing over 10% within the past day, signaling that traders are growing more confident. Today’s data shows that there are about $57 billion in open Bitcoin derivatives contracts, up from a low of $45 billion earlier this month.
As macroeconomic pressures ease, traders appear to favor Bitcoin once again, suggesting a more stable Market environment. Kendrick emphasizes the lower volatility of the Mag 7B index compared to the traditional Mag 7, showing an almost 2% reduction in average annualized volatility.
The debate surrounding Bitcoin’s correlation with stocks has been ongoing, with insights indicating Bitcoin has, at times, performed better than all asset classes, including equities and gold. Kendrick notes that during certain periods, Bitcoin’s trading behavior closely mirrored that of major tech stocks, further suggesting that cryptocurrencies may be solid investments akin to traditional stocks.
In summary, with Bitcoin’s rising Market influence and its growing similarities to tech stocks, investors may want to reevaluate their perspectives on this digital currency. As the Bitcoin landscape continues to evolve, it appears to be a burgeoning asset worthy of consideration in modern investment portfolios.
Tags: Bitcoin, tech stocks, investment strategy, cryptocurrency, Market trends.
What does it mean for Bitcoin to trade like a tech stock?
When Bitcoin trades like a tech stock, it means its price moves similarly to shares of tech companies. This can show high volatility and quick price changes based on Market sentiment and news.
Why is Standard Chartered referencing Bitcoin’s trading patterns?
Standard Chartered is looking at Bitcoin’s behavior to highlight how it’s becoming more similar to traditional tech stocks. They believe this trend can affect how investors view and trade Bitcoin.
How does Bitcoin’s trading affect investors?
If Bitcoin is acting like a tech stock, investors may need to be more cautious. They should be prepared for rapid price swings and consider their risk tolerance before investing.
Are there benefits to Bitcoin trading like tech stocks?
Yes, it can attract more traditional investors who are familiar with tech stocks. This might lead to increased acceptance of Bitcoin in mainstream finance, potentially boosting its long-term value.
What should I know before investing in Bitcoin now?
Before investing in Bitcoin, research is crucial. Understand the Market trends, your financial goals, and be ready for price changes. It’s smart to invest only what you can afford to lose.