According to Standard Chartered, Bitcoin is still just another deal with Wall Street. It is grouped with tech stocks and traded like a single stock. It can be picked up when it’s convenient, and thrown when it’s not.
The bank said Monday that the correlation between Bitcoin and the Nasdaq is currently around 0.5, rising to 0.8 earlier this year. At the same time, the link with gold fell apart. Since January, that correlation has dropped to zero at some point. It’s now just above 0.2.
“Bitcoin trading is highly correlated with Nasdaq in a short amount of time,” Geoff Kendrick, global head of Digital Assets Research at Standard Chartered, wrote in the report. He said this trend is why Bitcoin should be considered another major technological trade.
Kendrick said, “If included (in a high-tech basket), it would be more institutional purchases as BTC serves multiple purposes in its investor portfolio.”
This is nothing new. Wall Street continues to switch ways of looking at codes. For a month, it’s a high-tech play. The following month, it was a “hedge against traditional systems.” However, Kendrick did not deny the idea of hedging. He said, “In reality… the need for such a hedge is extremely rare.”
Added Bitcoin with Standard Charter to High Tech Stock Experiments
Standard Chartered, meanwhile, also constitutes a new index called The Mag 7b. It takes seven tech stocks of epic tech, including the Alphabet, Amazon, Apple, Meta, Microsoft, NVIDIA, Tesla, and more, but it kicks out Tesla and adds Bitcoin to its place.
Kendrick said since December 2017, the Mag 7b has outperformed the regular Mag 7 by about 5%. Despite the small lead in 2022, it happened in five out of seven calendar years. On average, Mag 7B has returned about 1% more per year than Mag 7. He said the profits were consistent, not large.
He also compared Bitcoin volatility to Nvidia over a long period of time. Bitcoin has fallen by about 16% and Nvidia has fallen by 12% since January 20th, when Donald Trump re-inaugurated. Meanwhile, Tesla crashed 36%. It was like ether, and at the same time it fell by 38%.
Kendrick said, “Investors can see Bitcoin as part of (traditional finances) and technology allocation.” He added that Bitcoin’s role in the portfolio will become more solid and that this dual purpose may attract more money.
Volatility from Trump’s tariffs puts Bitcoin under pressure
Bitcoin has dropped by about 5% a year since Trump started pushing tariffs again. Standard Chartered said that it’s not surprising as Bitcoin tends to respond to macroeconomic triggers. Banks pointed to two specific patterns. Bitcoin usually falls as the money supply (M2) grows and the US Dollar Index (DXY) rises. These two relationships are still active.
Traders are currently awaiting bailouts in the second quarter. I hope that Bitcoin will bounce back as it makes tariffs clearer. However, the White House continues to speculate on the market. US stock futures were flat on the evening of Monday, March 24th. That came a day after a major metric surged in hopes of Trump scaling his plans.
Both the S&P 500 futures and the Nasdaq 100 futures fell 0.1%, while Dow Jones Futures fell 43 points. As the Wall Street Journal reported, hesitant came after the profits of the day. The White House could cut the scope of tariffs scheduled to be made public on April 2nd, their reports.
Morgan Stanley says market bounce won’t last long
On the same Monday, Morgan Stanley’s Mike Wilson spoke about CNBC Fast money. He called the current rebound “a low-quality gathering.” He said it started with a short aperture, and now it is driven by small technologies like a revenue revision that is stable with some of the Mag 7 names. “But in the last few days, the stocks act better and that can make the index higher. How much higher is it? 5,900. So we’re pretty much there.”
The market has got off to a strong start this week. On Monday, the S&P 500 rose 1.8% to close at 5,767.57. It’s still about 6% below the record high. The Dow added nearly 600 points, while Nasdaq Composite rose more than 2%.
The grand Seven was a big part of the rally. They include Apple, Nvidia, Meta, Amazon, Alphabet, Microsoft, and Tesla. Tesla saw its best daily profits since November.
But Wilson doesn’t think the momentum will last long. He wrote in a memo on Monday that there are restrictions on the assembly. “The stronger seasons, lower prices and excessive momentum indicators support the call for tradeable gatherings from ~5,500,” he said. He also said weaker dollars and stable earnings estimates from large tech stocks could regain capital in US stocks. But after that short-term move, he warned, volatility goes nowhere.
“Whatever the rally we’re getting now, I think we’ll probably end up waning in revenue in May and June. Then we’ll probably create a less durable low later this year.”
He denounced the weaknesses of the market in fundamentals and technology rather than tariffs. “The reason the market has low in the last three or four months has nothing to do with tariffs,” Wilson said. “It mainly relates to the fact that revenue revisions have fallen over. The Fed has stopped the reduction rate. You have had a stricter enforcement on immigration.
At the time of pressing, Bitcoin was just worth $87,722.
