Bitcoin is increasingly trading in lockstep with the beleaguered software stock sector, with its latest correction unfolding alongside a broader sell-off in technology equities. According to analysis from asset management firm ByteTree, the 30-day rolling correlation coefficient between Bitcoin (BTC) and the iShares Expanded Tech Software ETF (IGV) has reached a strong 0.73. A coefficient of 1.0 indicates perfect lockstep movement, making the current level a significant indicator of synchronized price action.
The parallel downturn is clear in year-to-date performance. The IGV ETF, heavily weighted toward major software and services companies like Microsoft, Oracle, Salesforce, Intuit, and Adobe, has fallen approximately 20% since the start of the year. Bitcoin has mirrored this weakness, declining 16% over the same period.
While the broader technology sector, as represented by the Nasdaq 100 (QQQ), remains only about 4% below its record high, software stocks have absorbed the brunt of the selling pressure. Bitcoin is now trading more in line with this weaker segment of the market rather than the broader tech index.
Analysts point to several interconnected drivers for this deepening symbiosis. Fundamentally, "Bitcoin is just open-source software," as noted by Van Eck's Matthew Sigel, making it susceptible to the same sector-wide pressures. The software industry is currently grappling with the massive capital expenditure required for AI integration, increased regulatory scrutiny, and the impact of high-interest rates on growth stock valuations.
Both asset classes are highly sensitive to U.S. Federal Reserve monetary policy and are treated by investors as "risk-on" growth assets. This shared investor base and macroeconomic sensitivity reinforce the statistical price correlation.
ByteTree's research provides a historical context, noting that the average technology bear market lasts about 14 months. With the current downturn for Bitcoin and software stocks having begun in October of the previous year, this pattern suggests downward pressure could persist through much of 2026. However, the firm also notes that a resilient economic backdrop could provide underlying support for Bitcoin.
This rising correlation challenges a traditional investment thesis for Bitcoin: its role as a non-correlated asset for portfolio diversification. The data suggests that during periods of tech sector stress, Bitcoin may not provide the expected diversification benefit, forcing portfolio managers to reassess risk management and asset allocation strategies for funds exposed to both digital assets and technology equities.
