Bitcoin has started to move independently from software stocks following the outbreak of conflict involving Iran on Feb. 28, marking a sharp shift after months of close alignment. Since that date, Bitcoin has gained more than 5%, climbing back above $69k, including an increase of over 0.5% in the past 24 hours.
In contrast, the iShares Expanded Tech-Software Sector ETF has fallen more than 2% during the same period. The performance gap signals that investors are beginning to treat cryptocurrency and software equities as separate assets in the short term.
Correlation Breakdown Signals Market Decoupling Trend
Correlation between Bitcoin and IGV dropped sharply after the conflict began. In early February, the relationship stood near 1.0, indicating the two assets were moving almost in lockstep. Following the outbreak, the correlation plunged to 0.13, reflecting near decoupling, before partially recovering to around 0.7.
Over the past three months, both assets showed similar declines, with Bitcoin falling 26% and IGV losing 23%. Year to date, both remain down around 21%, while over five years Bitcoin has gained 18%, compared with 10% for IGV. Bitcoin also experienced a deeper drawdown, falling about 50% from its October all-time high, while IGV declined roughly 35% from its own peak.
AI Pressure and Software Sector Risks Drive Divergence
Software stocks tracked by IGV include major companies such as Microsoft, Oracle, and Salesforce. Investors are increasingly concerned that rapid growth in artificial intelligence could compress profit margins and valuation multiples across Software-as-a-Service businesses as competition rises and barriers to entry decline.
Bitcoin, meanwhile, is behaving more like a macro-sensitive asset, drawing support from heightened geopolitical uncertainty linked to the Iran conflict, which has encouraged investors to diversify away from traditional technology equities.
Disclaimer
This content is for informational purposes only and does not constitute financial, investment, or legal advice. Cryptocurrency trading involves risk and may result in financial loss.