What to know:
- Bitcoin has outperformed software stocks since Feb 28, gaining over 5% while the iShares Expanded Tech-Software Sector ETF has fallen more than 2%, marking a clear short-term divergence after months of tight correlation.
- Correlation between the two assets collapsed from near 1.0 in early February to 0.13 after the conflict began, before partially recovering to around 0.7.
Following the start of the war with Iran on February 28th, Bitcoin began to move independently from software stocks. The iShares Expanded Tech-Software Sector ETF (IGV) is a good indicator of how the software sector is performing.
Bitcoin has performed very well recently, increasing by over 5% and climbing back above $69,000. It’s also gained more than 0.5% in just the last day.
I’ve noticed a really interesting shift in how the market is reacting. While Bitcoin has been holding pretty steady since the recent conflict started, IGV – a tech stock ETF – has actually dropped over 2%. It seems like investors are beginning to see Bitcoin and tech stocks as separate entities, at least for the time being. It’s like the usual connection between them is weakening, which is something I’m definitely keeping an eye on.
For the past few months, Bitcoin and the ETF have largely followed the same trends. Both have decreased roughly 21% this year, with Bitcoin falling 26% and the ETF dropping 23% over the last three months. Looking at the longer term, Bitcoin has increased 18% over five years, while IGV has gained 10%. Essentially, while both investments move in similar directions, Bitcoin is significantly more prone to price swings.
These declines also show the trend. Bitcoin’s value dropped around 50% from its peak in October, and IGV, which reached its highest point a little before that, fell approximately 35% from its own high.
The relationship between Bitcoin and the iShares Expanded Tech-Software Sector ETF (IGV) was initially very strong. From the beginning of February, they moved almost identically, as shown by a correlation close to 1.0. However, when the war started, this connection weakened significantly, falling to 0.13, which suggested they were no longer closely linked. Since then, the correlation has recovered somewhat, reaching around 0.7. Correlation figures range from -1.0 to +1.0, where 0 means there’s no relationship between the two.
Why have software stocks been hit harder?
The iShares Global Tech ETF (IGV) is largely invested in major software and tech service companies like Microsoft, Oracle, and Salesforce. There’s growing concern that the rise of artificial intelligence will reduce profits and lower stock valuations for software companies, particularly those offering Software as a Service (SaaS), due to increased competition and easier market entry. At the same time, Bitcoin is behaving more like an asset influenced by broader economic trends, and is gaining value from global political instability.
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2026-04-07 13:22