Bitcoin is just another trade to Wall Street—and it’ll dump it in the end like always

According to Standard Chartered, Bitcoin is still just another trade to Wall Street. It’s being grouped with tech stocks and traded like one. It gets picked up when it’s useful and tossed when it’s not.

The bank said on Monday that Bitcoin’s correlation with the Nasdaq is now around 0.5, and earlier this year, it went up to 0.8. At the same time, its link with gold has collapsed. Since January, that correlation dropped to zero at one point. Now it’s just above 0.2.

Geoff Kendrick, global head of digital assets research at Standard Chartered, wrote in the report, “Bitcoin trading is highly correlated to the Nasdaq over short time horizons.” He said this trend is why Bitcoin should be looked at as another big tech trade.

Kendrick added, “If it were included [in a tech basket], the implication would be more institutional buying as BTC would serve multiple purposes in investor portfolios.”

This isn’t new. Wall Street keeps switching how it sees crypto. One month, it’s a tech play. The next month it’s a “hedge against the traditional system.” But Kendrick didn’t deny that hedge idea. He said, “In reality… the need for such hedges is very infrequent.”

Standard Chartered adds Bitcoin to tech stock experiment Mag 7B

Meanwhile, Standard Chartered has also made up a new index called the Mag 7B. That one takes the Magnificent 7 tech stocks — Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla — but kicks Tesla out and adds Bitcoin in its place.

Kendrick said that since December 2017, Mag 7B outperformed the regular Mag 7 by about 5%. That happened in five out of seven calendar years, even though the lead in 2022 was tiny. On average, Mag 7B returned about 1% more per year than Mag 7. He said the gains weren’t massive but were consistent.

He also compared Bitcoin’s volatility to Nvidia’s over a longer period. Since January 20, when Donald Trump took office again, Bitcoin has dropped about 16%, and Nvidia is down 12%. Meanwhile, Tesla has crashed 36%. That’s more like ether, which has fallen 38% in the same time.

Kendrick said, “Investors can view Bitcoin as both a hedge against [traditional finance] and as part of their tech allocation.” He added that Bitcoin’s role in portfolios is getting more solid and that this dual purpose might attract more money, especially now that it’s being adopted more by institutions.

Volatility from Trump’s tariffs puts Bitcoin under pressure

Since Trump started pushing tariffs again, Bitcoin dropped around 5% for the year. Standard Chartered said that’s not surprising, since Bitcoin tends to react to macroeconomic triggers. The bank pointed to two specific patterns: Bitcoin usually moves up when money supply (M2) grows, and down when the U.S. dollar index (DXY) rises. Those two relationships are still active.

Traders are now waiting for relief in Q2, hoping that Bitcoin will bounce as the market gets more clarity on tariffs. But the White House has kept markets guessing. U.S. stock futures were flat Monday night, March 24. That came after a day when major indexes had surged on hopes that Trump would scale back his plans.

The S&P 500 futures and Nasdaq 100 futures were both down 0.1%, while the Dow Jones futures dropped 43 points. The hesitation came after gains earlier that day, as reported by The Wall Street Journal. According to their report, the White House may reduce the scope of the upcoming tariffs, which are supposed to go live on April 2.

Morgan Stanley says market bounce won’t last long

On the same Monday, Morgan Stanley’s Mike Wilson spoke to CNBC’s Fast Money. He called the current rebound a “low-quality rally.” He said that it started off with a short squeeze, and now it’s being driven by small technicals, like earnings revisions stabilizing in some of the Mag 7 names. Wilson said, “The last couple of days, though, stocks have acted better, and that can take the index higher. How high? 5,900. So, we’re almost there.”

The market had a strong start to the week. On Monday, the S&P 500 rose 1.8% and closed at 5,767.57. That’s still about 6% below its record high. The Dow added nearly 600 points, and the Nasdaq Composite went up by more than 2%.

The Magnificent Seven were a big part of that rally. Those include Apple, Nvidia, Meta, Amazon, Alphabet, Microsoft, and Tesla. Tesla saw its best daily gain since November.

But Wilson doesn’t think that momentum will last long. He wrote in his Monday note that the rally has limits. “Stronger seasonals, lower rates and oversold momentum indicators support our call for a tradeable rally from ~5500,” he said. He also mentioned that a weaker dollar and stabilized earnings estimates from the big tech stocks could bring capital back to U.S. equities. But after that short-term move, he warned, the volatility isn’t going anywhere.

Wilson added, “Whatever rally we’re getting now, we think probably end up fading into earnings, into May and June. Then, we’ll probably make a more durable low later in the year.”

He blamed the weakness in markets not on tariffs but on fundamentals and technicals. “The reason the markets are lower over the course of the last three or four months has nothing to do with tariffs,” Wilson said. “It’s mostly to do with the fact that earnings revisions have rolled over. The Fed stopped cutting rates. You had stricter enforcement on immigration. You have [Department of Government Efficiency]. All of those things are growth negative.”

At press time, Bitcoin was worth exactly $87,722.

Source