According to a new study published by Standard Chartered, the role of Bitcoin in financial markets is undergoing a transformation. Bitcoin, which has traditionally been seen as a hedge against inflation and macroeconomic fluctuations, is now exhibiting a stronger correlation with technology stocks traded on Nasdaq. A new study prepared by Geoffrey Kendrick, Head of Digital Asset Research at Standard Chartered, suggests that Bitcoin (BTC) is evolving its role in traditional financial markets and is increasingly behaving like a technology stock traded on Nasdaq. The research argues that Bitcoin not only serves as a hedge against macroeconomic fluctuations but also functions as an investment tool associated with technology stocks on a broader scale. ROLE OF BITCOIN CHANGING The report published by Standard Chartered highlights that Bitcoin’s short-term trading patterns have a high correlation with the Nasdaq Composite index. While historically Bitcoin has stood out as a hedge tool against turbulence in the traditional financial system, in recent times, it has been showing a more synchronized movement with U.S. technology stocks. For example, the rise in the value of Bitcoin during the collapse of Silicon Valley Bank in March 2023 indicated to investors as a hedge against risk, while recent price movements are mirroring those of Nasdaq. To test this trend, Standard Chartered performed the creation of a new hypothetical index named “Mag 7B” by replacing Tesla from the “Grand 7” technology stocks with Bitcoin. The technology stocks known as the “Grand 7” typically include Apple, Microsoft, Amazon, Meta, Alphabet, Nvidia, and Tesla. The newly created “Mag 7B” index now includes Bitcoin instead of Tesla. HIGHER RETURNS, LOWER VOLATILITY The study reveals that upon examining the performance of this new index, it offers both higher returns and lower volatility compared to the traditional “Grand 7”. Kendrick notes that these findings demonstrate Bitcoin’s positioning as both a technology stock and a hedge tool in traditional financial markets. Highlighting that the “Mag 7B” index created by adding Bitcoin instead of Tesla offers a more resilient and potentially more profitable investment basket, Kendrick suggests that as Bitcoin’s ties with the technology sector strengthen, its role in investor portfolios could change. INSTITUTIONAL INTEREST AND FUTURE EXPECTATIONS The increasing integration of Bitcoin into traditional investment portfolios is attracting the attention of institutional investors. Kendrick believes that Bitcoin provides a dual benefit as both a hedge against risk and a growth asset. This situation could encourage new capital inflows into Bitcoin. On the other hand, Kendrick suggests that Bitcoin could experience an upward movement in the short term. Pointing out factors such as more positive regulations regarding crypto assets in the U.S. and Nasdaq’s rebalancing that could support Bitcoin, Kendrick states, “Higher Nasdaq would mean higher Bitcoin. Currently, the focus is on the $90,000 level.” Bitcoin registered an increase of over 3.5% on Monday, with the total cryptocurrency market value also rising by 1.5% to reach $2.9 trillion.