Bitcoin’s Strength Against Magnificent Seven Tech Stocks Reaches All-Time High
Despite a five-month low, Bitcoin’s price has strengthened against the Magnificent Seven, a group of Nasdaq firms including top tech names like Apple, Nvidia, and Tesla.
Since November 5, the largest cryptocurrency by market value has shown resilience against the “Magnificent Seven,” a group of Nasdaq firms including top tech names like Apple, Nvidia, and Tesla. In fact, on Monday, one Bitcoin was worth around 1,993 shares of the Roundhill Magnificent Seven ETF (MAGS), which offers equal weight exposure to the group of tech firms. A year ago, one Bitcoin could’ve bought 1,756 of the exchange-traded fund’s shares, when it was worth $69,000.
A Rising Trend
According to Matthew Sigel, head of digital assets research at asset manager VanEck, the ratio has reached an all-time high. Sigel has been telling clients for years to use Bitcoin to hedge FAANG exposure, referring to a popular acronym for mega-cap tech stocks Meta (formerly Facebook), Amazon, Apple, Netflix, and Google.
Bitcoin’s Relative Strength
Bitcoin’s relative strength against Magnificent Seven stocks was at its highest level within the past year on Monday, rising 13.5% over the course of that period. Despite Bitcoin recently trading like a tech stock, some market participants viewed it as a sign of divergence.
What’s Behind the Strength?
According to Bitwise Senior Investment Strategist Juan Leon, “In past market turmoil, Bitcoin has had a mixed track record of providing short-term protection. Is this the turning point when it starts to shine as a resilient short and long-term store of value?”
Bitcoin’s Performance Amidst Market Turmoil
As President Trump has pushed forward with his trade war, U.S. stocks have weathered their worst stretch since the onset of the coronavirus pandemic. On Monday, the S&P 500 fell for a third straight day and has dropped 10% over the past week, per Yahoo Finance.
A Comparison to Historical Drawdowns
Thomas Perfumo, Kraken’s global economist, notes that “Compared with historical macroeconomic shocks or crypto market cycles, these are not record-setting drawdowns. The asset class has weathered worse and, historically, emerged stronger each time.”
Conclusion
As Bitcoin’s price continues to fluctuate, its strength against the Magnificent Seven tech stocks serves as a reminder of its potential as a hedge against market volatility. While some market participants view Bitcoin’s recent performance as a sign of divergence, others see it as a sign of resilience. Only time will tell if Bitcoin will continue to shine as a resilient short and long-term store of value.
FAQs
- What is the Magnificent Seven ETF? The Roundhill Magnificent Seven ETF (MAGS) offers equal weight exposure to a group of Nasdaq firms including top tech names like Apple, Nvidia, and Tesla.
- What is Bitcoin’s relative strength against the Magnificent Seven tech stocks? Bitcoin’s relative strength against Magnificent Seven stocks was at its highest level within the past year on Monday, rising 13.5% over the course of that period.
- Why is Bitcoin’s recent performance a sign of divergence? Despite Bitcoin recently trading like a tech stock, some market participants view its recent performance as a sign of divergence, indicating that it may be emerging as a resilient short and long-term store of value.
- How has Bitcoin performed amidst market turmoil? Bitcoin’s price has fallen as low as $74,600 on Monday, setting a new low for President Trump’s second term. However, it is still changing hands above its Election Day price of $69,000 on November 5.
