Bitcoin’s early-week advance lost momentum on Thursday even as software stocks rallied sharply, breaking the tight correlation the two markets have shared in recent months.
Bitcoin fell nearly 2% over the past 24 hours to about $71,400 after its recent climb began fading once U.S. trading got underway.
The pullback came alongside weakness in broader equities as geopolitical tensions tied to the Iran conflict continued to weigh on sentiment. Oil prices jumped roughly 5.3% to around $78.70 per barrel amid concerns the situation could drag on. The Dow Jones Industrial Average dropped 1.4%, while the S&P 500 declined 0.7%.
The Nasdaq Composite, however, slipped only 0.4% as investors poured into software stocks that had previously been under heavy pressure. The iShares Expanded Tech-Software Sector ETF (IGV) climbed about 2% on the day and has gained roughly 9% over the past five trading sessions.
The divergence is notable because bitcoin and software stocks have moved almost in tandem since October. Both markets dropped sharply amid concerns over potential disruption from artificial intelligence in the software industry, before rebounding together from recent lows.
Still, some analysts say bitcoin has yet to clear the risks. Arthur Hayes, chief investment officer at Maelstrom, noted that the cryptocurrency’s rise toward $74,000 has not broken its correlation with the IGV software ETF.
Whether Thursday’s split between the two markets will continue remains uncertain, but software stocks rising while bitcoin declines is not the scenario many crypto bulls were hoping for. Hayes warned that the recent bounce could still turn out to be a temporary “dead cat bounce.”
Market participants may also be reducing risk ahead of Friday’s closely watched U.S. employment report for February. Recent economic data has frequently surprised to the upside, lowering expectations that the Federal Reserve will resume interest rate cuts soon.
Derivatives markets on the Chicago Mercantile Exchange now indicate an 88% chance that the Fed will leave rates unchanged not only at its upcoming meeting but also in April. Just a month ago, those odds were closer to 59%.
Despite the uncertainty, some traders remain cautiously optimistic. Bryan Tan, a trader at Wintermute, said improving inflows into spot bitcoin exchange-traded funds—nearly $2 billion over the past week—alongside stabilizing trading volumes are helping support the market.
Tan added that the muted response to disruptions around the Strait of Hormuz could leave room for bitcoin to push back toward the $74,000 to $75,000 range.
Analysts at Bitfinex also highlighted a “notable increase in spot market strength,” suggesting that the latest rally has been driven more by genuine buying activity than by leveraged speculation.
If that trend continues, they said the crypto market could see a period of relief in the weeks and months ahead.
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