A new study published by Standard Chartered suggests that Bitcoin’s role in financial markets is undergoing a transformation. Traditionally considered a hedge against inflation and macroeconomic fluctuations, Bitcoin is now showing a stronger correlation with technology stocks traded on Nasdaq. Prepared by Geoffrey Kendrick, Head of Digital Asset Research at Standard Chartered, the study claims that Bitcoin (BTC) is evolving within traditional financial markets and increasingly behaving like a technology stock traded on Nasdaq. According to the research, Bitcoin is not only serving as a hedge against macroeconomic fluctuations but also function as an investment vehicle associated with technology stocks on a broader scale.

In the report published by Standard Chartered, it is highlighted that Bitcoin’s short-term trading models have a high correlation with the Nasdaq Composite index. Historically, Bitcoin stood out as a hedge against turbulence in the traditional financial system, but recently has been displaying more synchronized movements with U.S. technology stocks. For instance, the rise of Bitcoin during the Silicon Valley Bank’s collapse in March 2023 indicated investors’ perception of it as a hedging tool, while recent price movements have mirrored those of Nasdaq.

To test this trend, Standard Chartered removed Tesla from the “Magnificent 7” technology stocks and replaced it with Bitcoin to create a hypothetical index called “Mag 7B”. The “Magnificent 7” typically includes Apple, Microsoft, Amazon, Meta, Alphabet, Nvidia, and Tesla. The newly formed “Mag 7B” index, however, replaces Tesla with Bitcoin.

The study shows that this new index provides both higher returns and lower volatility compared to the traditional “Magnificent 7”. Kendrick suggests that these findings demonstrate Bitcoin’s positioning as both a technology stock and a hedge against risks in traditional financial markets.

Emphasizing that the “Mag 7B” index created by replacing Tesla with Bitcoin offers a more robust and potentially more profitable investment basket, Kendrick states that with Bitcoin’s strengthening ties to the technology sector, its role in investor portfolios could change.

The increasing presence of Bitcoin in traditional investment portfolios is heightening interest from institutional investors. According to Kendrick, Bitcoin offers a dual benefit as both a hedge and a growth asset, potentially prompting new capital inflows.

Furthermore, Kendrick believes that Bitcoin could experience an upward move in the near term. Factors such as more favorable regulations on crypto assets in the U.S. and a rebalancing of Nasdaq could support Bitcoin. Kendrick notes that “A higher Nasdaq will mean a higher Bitcoin. The focus is currently on the $90,000 level.”

On Monday, Bitcoin recorded a gain of over 3.5%, while the total cryptocurrency market value increased by 1.5% to reach $2.9 trillion.