Bitcoin decouples from software stocks as geopolitical tensions and AI pressures redraw markets

Bitcoin’s correlation with software equities has broken down sharply, shifting from near-perfect alignment to near zero following the onset of the Iran conflict.

Since the war began on Feb. 28, Bitcoin has started to decouple from the software sector, often represented by the iShares Expanded Tech-Software Sector ETF (IGV). The divergence marks a notable shift after months of closely synchronized price action.

During this period, Bitcoin has outperformed. The cryptocurrency has gained more than 5%, reclaiming levels above $69,000 and adding over 0.5% in the past 24 hours alone. In contrast, IGV has declined by more than 2% since the conflict began, highlighting a growing gap in performance.

The divergence suggests investors are beginning to treat Bitcoin and software stocks as distinct assets, at least in the near term.

Until recently, however, their trajectories were closely aligned. Over the past three months, Bitcoin fell roughly 26%, while IGV dropped 23%. Year to date, both are down around 21%. Over a five-year period, Bitcoin has risen 18% compared to IGV’s 10%, though with significantly higher volatility.

That higher volatility is also evident in drawdowns. Bitcoin has declined about 50% from its October all-time high, whereas IGV, which peaked slightly earlier, has fallen approximately 35% from its own peak.

Correlation data reinforces the shift. In early February, Bitcoin and IGV showed a correlation close to 1.0, indicating near lockstep movement. Following the outbreak of the war, that figure plunged to 0.13—signaling near-complete decoupling—before partially recovering to around 0.7. Correlation values range from -1.0 to +1.0, with zero indicating no relationship.

IGV is heavily weighted toward major software and services firms such as Microsoft, Oracle, and Salesforce. The sector is increasingly facing pressure from the rapid rise of artificial intelligence, which is expected to compress margins and valuation multiples, particularly in Software-as-a-Service (SaaS) as competition intensifies and barriers to entry decline.

Bitcoin, by contrast, is behaving more like a macro-driven asset, drawing support from heightened geopolitical uncertainty and shifting investor positioning.