Bitcoin has decoupled from software equities in the wake of the Iran conflict, with correlation between the two collapsing from near-perfect alignment to near zero.
Since tensions escalated on Feb. 28, Bitcoin has diverged from the iShares Expanded Tech-Software Sector ETF (IGV), a key benchmark for software stocks. The shift follows months of closely synchronized movement and signals a change in market dynamics.
Performance trends highlight the split. Bitcoin has advanced more than 5% during the period, reclaiming levels above $69,000 and posting incremental daily gains. Meanwhile, IGV has declined over 2%, reflecting continued weakness across the software sector.
The divergence suggests investors are beginning to reposition, treating Bitcoin and software equities as separate trades rather than part of the same risk basket.
That marks a departure from recent history. Over the past three months, Bitcoin dropped roughly 26%, while IGV fell about 23%. Year to date, both are down करीब 21%. Over a five-year timeframe, Bitcoin has gained 18% compared to IGV’s 10%, though with significantly higher volatility.
This higher volatility is also visible in drawdowns. Bitcoin has retreated about 50% from its October peak, while IGV has fallen approximately 35% from its own high after peaking earlier.
Correlation data reinforces the shift. In early February, Bitcoin and IGV showed a correlation near 1.0, indicating near-identical price movement. After the conflict began, that figure plunged to 0.13—signaling near-total decoupling—before recovering to around 0.7. Correlation values range from -1 to +1, with zero indicating no correlation.
IGV is heavily concentrated in large-cap software names such as Microsoft, Oracle, and Salesforce. The sector is facing mounting pressure from artificial intelligence, which is expected to compress margins and weigh on valuations, particularly in the Software-as-a-Service space as competition intensifies.
Bitcoin, by contrast, is increasingly behaving like a macro asset, drawing support from geopolitical uncertainty and shifting global risk sentiment.
