Bitcoin (BTC) Should Be Viewed as a Tech Stock, Not Digital Gold, New Report Argues

While bitcoin (BTC) proponents commonly view the largest cryptocurrency as a digital version of gold, a new report from global bank Standard Chartered argued investors should see it more like a tech stock with some extra benefits.

Bitcoin (BTC) is frequently viewed by its supporters as a digital commodities like a new-age gold, however, a new report by Standard Chartered sees the world’s biggest cryptocurrency more closely aligned with a tech stock—with some extra advantages.

In a recent report, Geoff Kendrick, a strategist at the global bank, and the team pointed out that bitcoin’s correlation with the Nasdaq index has “almost always” been stronger compared to gold, the traditional safe-haven asset.

According to the report, bitcoin might play a role as a place to hide in instances of financial instability, like the 2023 regional banking crisis or what might be the unsustainable U.S. debt trajectory. However, the report adds that there's rarely a need for such hedges, which explains why bitcoin's behavior is increasingly like that of a traditional tech stock.

“Investors can view BTC as both a hedge against traditional finance and as part of their tech allocation,” said Kendrick. But, at least “in the short term, BTC may be better viewed as a tech stock than as a hedge against TradFi issues,” he added.

Further playing with the idea of bitcoin as part of a tech portfolio, the report proposed a remodel of the index of the so-called Magnificent 7 (Mag 7) stocks—the mega-cap tech names that have driven overall market returns of late, Apple (AAPL), Alphabet (GOOGL), Microsoft (MSFT), Nvidia (NVDA), Amazon (AMZN), Meta (META) and Tesla (TSLA). This new “Mag 7B” would swap out Tesla for bitcoin.

The result? The Mag7B consistently generated higher risk-adjusted returns compared to the original group over the past seven years, reinforcing bitcoin's role in a tech-focused portfolio, said Kendrick. The Mag7B outperformed the Mag7 on average by about 1% with nearly 2% lower volatility on an annual basis, a key benefit to institutional investors and large asset allocators, he added.

“BTC should be seen as serving multiple purposes in investor portfolios. This would open up the possibility of even more institutional buying,” Kendrick noted.

Asset managers have been including bitcoin in investment portfolios for diversification purposes. For example, BlackRock (NYSE:BLK), the world’s largest asset manager, recommended considering an up to 2% bitcoin allocation in traditional stock and bond portfolios. Meanwhile, asset managers like 21Shares and Bitwise have launched exchange-traded funds (ETFs) combining gold and bitcoin as complementary assets.