Bitcoin has moved out of sync with software equities following the outbreak of the Iran conflict, with correlation between the two dropping sharply from near-perfect levels to near zero.

Since Feb. 28, Bitcoin has diverged from the iShares Expanded Tech-Software Sector ETF (IGV), a widely used benchmark for software stocks. The break marks a notable shift after an extended period of tight co-movement.

Market performance reflects the change. Bitcoin has gained more than 5% over the period, climbing back above $69,000 and posting modest daily gains. IGV, by contrast, has declined more than 2%, highlighting a growing divergence in investor positioning.

The shift suggests that Bitcoin is increasingly being traded on a different set of drivers than software equities, at least in the near term.

Until recently, the two assets had tracked closely. Over the past three months, Bitcoin fell approximately 26%, while IGV dropped 23%. Year to date, both are down around 21%. Over a five-year period, Bitcoin has risen 18% compared with 10% for IGV, albeit with significantly higher volatility.

That volatility is also evident in drawdowns. Bitcoin has fallen roughly 50% from its October peak, while IGV—after topping out earlier—has declined about 35%.

Correlation data underscores the structural shift. In early February, the relationship between Bitcoin and IGV was close to 1.0, indicating near lockstep movement. Following the escalation in geopolitical tensions, correlation dropped sharply to 0.13—signaling near-complete decoupling—before partially recovering to around 0.7. Correlation values range from -1 to +1, with zero indicating no relationship.

IGV is heavily weighted toward large-cap software and services firms such as Microsoft, Oracle, and Salesforce. The sector is facing increasing pressure from artificial intelligence, which is expected to compress margins and weigh on valuation multiples, particularly within the Software-as-a-Service segment as competition intensifies.

Bitcoin, in contrast, is increasingly trading as a macro-driven asset, drawing support from geopolitical uncertainty and broader shifts in global market sentiment.