Bitcoin’s Rising Correlation with Nasdaq: A Game-Changer for Institutional Investment

According to a recent report from Standard Chartered Bank, the correlation between Bitcoin and the Nasdaq index is notably stronger than that with gold, suggesting that Bitcoin may function similarly to a large-cap technology stock. The bank’s analysis indicates that as of now, Bitcoin has a correlation of approximately 0.5 with the Nasdaq, having surged to nearly 0.8 earlier this year. Conversely, its relationship with gold has diminished considerably, currently sitting just above 0.2.

Geoff Kendrick, the bank’s Global Head of Digital Assets Research, emphasized that Bitcoin often exhibits a significant short-term correlation with the Nasdaq. This phenomenon implies that Bitcoin could be a viable asset in large-cap tech portfolios, potentially stimulating increased institutional investment. While Bitcoin is frequently dubbed “digital gold” and perceived as a hedge against financial system risks, Kendrick cautioned that genuine demand for hedging instruments remains scarce.

Additionally, Standard Chartered has developed a theoretical index labeled “Mag 7B,” which integrates Bitcoin alongside prominent tech giants like Alphabet, Amazon, and Microsoft, with Tesla excluded from this grouping. Remarkably, since its inception in December 2017, the Mag 7B index has surpassed the original Mag 7 by nearly 5%. Over the past seven years, it has outperformed Mag 7 in five out of seven years, demonstrating a resilient annual return that is roughly 1% higher than its counterpart.