Replacing TSLA in Mag 7 with Bitcoin Delivers Higher Returns & Lower Volatility, Says Stand Chart

Standard Chartered has proposed a revised version of the “Magnificent 7” tech index—dubbed “Mag 7B”—which replaces Tesla with bitcoin. By Cointelegraph.

Standard Chartered has come up with a spin on the so-called Magnificent 7 tech index—suggesting it may be time to replace Tesla with bitcoin.

The bank's analysis found that this "Mag 7B" hypothetical index delivers higher returns and lower volatility than the original Mag 7 index—suggesting bitcoin could enhance traditional tech-focused investment strategies.

Its analysis comes amid a record year for Tesla stock, which has seen its valuation soar to new highs, making it a key holding in many flagship investment funds—but also sparking debate over whether its meteoric rise is sustainable.

However, in a note on Monday, Geoffrey Kendrick, head of digital assets research at Standard Chartered, argued that bitcoin behaves more like a tech asset than a commodity in the short term—often showing stronger correlation with the Nasdaq than with gold.

This is a role which the original Magnificent 7 index, which comprises the seven largest U.S. tech stocks (Apple, Microsoft, Google-parent Alphabet, Nvidia, Meta, Tesla and Johnson & Johnson), already plays out—suggesting it could easily be adapted to include bitcoin.

Indeed, in the case of Mag 7B, which substitutes Tesla with bitcoin, the analysis found that the index delivered better performance metrics over the past five years.

Specifically, the adjusted (net of fees) return was 0.6% higher on average per year, while the annualized standard deviation of returns was 0.7% lower—suggesting that the index was also less volatile.

Moreover, the researchers found that the Mag 7B index also outperformed the Nasdaq 100 by 0.3% on average per year over the past five years—suggesting it could be a viable alternative for investors seeking broader exposure to the U.S. stock market.

This finding is significant because it suggests that bitcoin could be a valuable addition to the investment strategies of institutional investors, who are increasingly seeking to diversify their portfolios across asset classes and markets.

With bitcoin’s market cap now surpassing $1.7 trillion—more than twice that of Tesla—its growing acceptance among institutional investors is likely to continue driving price appreciation and attracting greater capital flows into the cryptocurrency market.

This dual function strengthens the case for bitcoin’s inclusion alongside major tech names like Apple, Microsoft and Nvidia—which are typically valued for their innovation, growth potential and strong balance sheets.

Likewise, bitcoin's role as a hedge against the risks of traditional finance, such as inflation, deflation and geopolitical uncertainty, is also becoming increasingly recognized by institutional investors.

In a world where traditional safe-haven assets, like U.S. Treasuries and gold, are no longer seen as reliable stores of value due to excessive government debt and the potential for monetary debasement, investors are actively seeking alternative assets which can preserve their purchasing power over the long term.

This is precisely the role which bitcoin is uniquely placed to fulfill, as it is a decentralized and scarce asset, with a fixed supply of 21 million coins.

This scarcity factor is crucial in the current macroeconomic climate, where an unprecedented surge in liquidity has been pouring into financial markets.

As institutions navigate this evolving landscape, they are placing a strong emphasis on identifying assets which can generate sustainable returns with lower levels of volatility.

In this context, bitcoin’s performance in comparison to the original Mag 7 index is noteworthy, especially considering the stellar returns achieved by the Magnificent 7 stocks in recent years thanks to their dominance in the digital economy.

Despite this, the analysis suggests that further improvements in both return and risk-adjusted performance could be realized by making a single substitution within the index—swapping out Tesla for bitcoin.

This finding highlights the potential of cryptocurrencies to enhance traditional investment strategies in a rapidly changing financial world.