Software Stocks Decouple From Bitcoin in Rare Market Divergence

The recent recovery in software stocks is changing a long-standing relationship with bitcoin, although past market cycles suggest the cryptocurrency could eventually close the gap.

Software equities have begun moving independently of Bitcoin. The iShares Expanded Tech-Software Sector ETF (IGV) has reached its strongest level against BTC in a year, with the ratio climbing to 0.0016.

Bitcoin and IGV had generally moved together for several years, but that correlation started to weaken in May. IGV is now down just 1% in 2026, compared with a 29% decline for bitcoin. Their 20-day rolling correlation has also slipped into negative territory for the first time since May 2024.

IGV has gained 40% from its April low, when concerns over an AI-driven downturn in the software-as-a-service sector triggered a sharp selloff. The ETF is now about 13% below its record high, while bitcoin remains roughly 50% below its own peak.

Bitcoin was also caught up in the software downturn after IGV plunged 40% from its fourth-quarter 2025 high. The move highlighted investors’ tendency to view bitcoin as a technology-linked risk asset.

Previous periods of negative correlation provide some optimism for Bitcoin bulls. Similar divergences emerged during Bitcoin’s 2018 bear market, the 2020 COVID-19 market shock and China’s crackdown on bitcoin mining in 2021. In each case, Bitcoin eventually caught up with software stocks and the relationship between the two assets turned positive again.

The key question now is whether the latest divergence follows the same historical pattern or marks a more permanent separation between digital assets and technology equities.