Standard Chartered Tests Bitcoin as Replacement for Tesla in New “Mag 7B” Hypothetical Index
Recently, Standard Chartered tested a new hypothetical index called “Mag 7B,” replacing Tesla with Bitcoin. The results indicated that this combination yielded a higher return and lower volatility compared to the original Magnificent 7 Index of U.S. stocks, suggesting that Bitcoin could be considered part of a technology stock portfolio.
Standard Chartered Tests New Index Mag 7B: Bitcoin Replaces Tesla
The Block reported that Standard Chartered launched a hypothetical index study yesterday named “Mag 7B,” removing Tesla from the original “Magnificent 7” index and substituting it with Bitcoin. The results demonstrated that this combination outperformed the original in both return and volatility.
Geoffrey Kendrick, Global Head of Digital Asset Research at Standard Chartered, pointed out in the report that Bitcoin’s short-term correlation with the Nasdaq Index is higher than that of gold, indicating Bitcoin’s potential to be included in large technology stock investment portfolios: “If Bitcoin is incorporated into such an index, it will encourage more institutional buying, as Bitcoin can serve multiple functions within a portfolio.”
Bitcoin’s Market Capitalization Far Exceeds Tesla’s
The original “Mag 7” index consists of seven stocks: Apple, Microsoft, Nvidia, Amazon, Alphabet (the parent company of Google), Meta, and Tesla. However, Tesla currently has the smallest market capitalization among these members, approximately $800 billion, while Bitcoin’s market capitalization reaches $1.7 trillion, nearly double that of Tesla.
Kendrick found that the simulated Mag 7B index yielded higher returns and exhibited lower volatility: “This suggests that investors can view Bitcoin as both a hedge against traditional financial (TradFi) risks and as part of their investment portfolio.”
Seven-Year Backtest: Higher Win Rate and Performance than Original Index
Kendrick noted that since Bitcoin reached its historical peak of nearly $20,000 in December 2017, the overall performance of the Mag 7B index has outperformed the original index by approximately 5%. He explained that this peak was chosen as a starting point to avoid statistical advantages due to Bitcoin’s price fluctuations.
Additionally, the Mag 7B outperformed the original index in five out of the past seven years, with an average annualized return about 1% higher: “Moreover, the annual volatility of Mag 7B has consistently been lower than that of the original index over these seven years, averaging nearly 2% lower, thus possessing a higher information ratio.”
The information ratio, a metric specifically designed to measure portfolio performance, helps investors understand whether they are balancing stability and risk control while pursuing excess returns.
Portfolio Transformation: Bitcoin Now on Par with Tech Stocks
Kendrick emphasized that removing Tesla and including Bitcoin in the Mag 7 index over the past seven years would benefit the portfolio: “Since the launch of Bitcoin spot ETFs in early 2024, the convenience and cost-effectiveness of trading Bitcoin have become comparable, if not superior, to other tech stocks.”
He mentioned: “Since Donald Trump’s re-inauguration in January 2025, Bitcoin’s volatility has behaved more similarly to Nvidia, while Tesla has shifted towards a trading pattern akin to Ethereum.”
Kendrick: Bitcoin Expected to Continue Attracting Capital
Looking ahead, Kendrick believes Bitcoin’s prospects are positive. After the Nasdaq experienced its worst quarter since mid-2022, he anticipates portfolio rebalancing that will drive Bitcoin buying: “We believe Bitcoin can play multiple roles in portfolios in the future, opening up greater possibilities for institutional capital inflow.” He added, “An upward movement in the Nasdaq signifies potential gains for Bitcoin, and the current market target is set at $90,000.”
Risk Warning
Cryptocurrency investments carry a high level of risk, and prices can be extremely volatile. You may lose your entire principal. Please assess the risks carefully.