Standard Chartered Bank’s Experimental Portfolio Analysis
Standard Chartered Bank’s experimental portfolio analysis shows that replacing Tesla with Bitcoin in the “Magnificent 7” index can not only enhance investment returns but also reduce overall portfolio volatility.
(Backstory: After three consecutive months of decline, on-chain data indicates a potential bullish reversal for Bitcoin?)
(Background: MicroStrategy adds $580 million to buy nearly 7,000 BTC, surpassing 500,000 Bitcoins, Strategy surges by 10%)
Wall Street financial institution Standard Chartered Bank recently presented a report indicating that if Tesla is replaced by Bitcoin in the “Magnificent 7” (Mag 7) index, the performance of the portfolio would significantly improve.
Data reveals that the “Mag 7B” index, which substitutes Bitcoin for Tesla, has outperformed the traditional “Magnificent 7” index in five out of the past seven years, with an average annual return approximately 1% higher.
Moreover, it is noteworthy that the volatility of Mag 7B has decreased by nearly 2% on average, resulting in an information ratio (a measure of excess return per unit of risk) of 1.13, surpassing the traditional index’s 1.04. Kendrick explained:
“We chose a higher starting point for the experiment to avoid giving Bitcoin an unfair advantage. The data shows that over the past seven years, if investors included Bitcoin in their portfolios while excluding Tesla, they would achieve superior investment results.”
Although the index known as “Mag 7B” is hypothetical, its results not only demonstrate higher returns and lower volatility compared to the traditional “Magnificent 7,” but also highlight that the volatility of U.S. stocks should not be underestimated.
Is Bitcoin a Risk or a Hedge Asset?
On the other hand, Geoffrey Kendrick, Head of Global Digital Asset Research at Standard Chartered Bank, pointed out that the correlation of Bitcoin with tech stocks, particularly its linkage with the Nasdaq index, is significantly higher in the short term than its correlation with traditional safe-haven assets like Gold.
Thus, the debate about whether Bitcoin is an emerging tech asset or an effective hedge against traditional financial risks is reignited. However, Kendrick believes that including Bitcoin in portfolios of large tech stocks will attract more institutional investors. He emphasized:
“Bitcoin plays multiple roles in a portfolio, which will open up new avenues for capital inflow.”
Bitcoin ETF and Market Dynamics
Another interesting observation is that Kendrick noted a significant change in Bitcoin trading behavior since Donald Trump took office in January 2025, with its volatility-adjusted trend becoming more similar to that of Nvidia, while Tesla’s trend is closer to that of Ethereum.
Regarding this week’s market outlook, Kendrick stated:
“With expectations that the U.S. tariff announcement in April will be relatively mild, the outlook for Bitcoin and cryptocurrencies appears optimistic. I anticipate that as the Nasdaq index rebounds, it will drive Bitcoin prices higher and challenge the $90,000 mark.”
Related Reports
Bitcoin shows signs of a bullish reversal after three months of decline with on-chain data indicating a potential recovery?
MicroStrategy adds $580 million to buy nearly 7,000 BTC, surpassing 500,000 Bitcoins, Strategy surges by 10%.
Bitcoin rises to $87,000; analysts note bullish signals in the options market as arbitrage selling pressure eases.