Headline: Bitcoin breaks from software stocks as Iran conflict and AI fears reshape market links
Since the outbreak of the Iran conflict on Feb. 28, bitcoin has begun to diverge from software equities, with the iShares Expanded Tech‑Software Sector ETF (IGV) — a common proxy for software names — showing an increasingly different trajectory.
What’s happening
- Bitcoin has been one of the stronger performers in this stretch, rising more than 5% since late February and trading back above $69,000 at times (roughly $68k–69k currently), including a gain of more than 0.5% over the past 24 hours.
- By contrast, IGV has fallen more than 2% over the same period. The gap suggests investors are starting to treat bitcoin and software stocks separately, at least in the near term.
Past linkage and recent split
- Until recently the two moved closely. Over the past three months bitcoin dropped about 26% while IGV fell roughly 23%; year‑to‑date both are down around 21%. Over five years bitcoin has gained about 18% versus roughly 10% for IGV — same direction but with much greater crypto volatility.
- From their peaks, bitcoin plunged about 50% from its October all‑time high, while IGV fell about 35% from its own top.
Correlation data
- The correlation between bitcoin and IGV was almost perfect (near +1.0) in early February, meaning they moved nearly in lockstep. After the conflict began, that relationship weakened sharply: correlation dropped to about 0.13 — effectively a near‑decoupling — before rebounding to roughly 0.7. (Correlation ranges from -1.0 to +1.0, with 0 indicating no correlation.)
Why the split matters
- IGV is dominated by large software and services companies such as Microsoft, Oracle and Salesforce. Investors are increasingly worried that the rise of artificial intelligence could compress margins and valuation multiples across software — especially SaaS — as competition intensifies and barriers to entry fall.
- Bitcoin, meanwhile, is behaving more like a macro asset, picking up demand amid geopolitical uncertainty and being treated as an alternative store of value by some market participants.
Bottom line
The recent divergence underscores how macro shocks (geopolitical risk) and structural tech trends (AI) can rewire correlations that had appeared stable. Traders and portfolio managers should expect these relationships to remain fluid: correlation has partially recovered but is not back to earlier levels, leaving room for further decoupling or reconvergence depending on how the conflict and AI narratives evolve.
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