Bitcoin (BTC) has begun a significant divergence from software equities, specifically the iShares Expanded Tech-Software Sector ETF (IGV), following the outbreak of the U.S.-Iran conflict on February 28, 2026. This marks a shift from the near-perfect correlation the two asset classes shared in early 2026.
Since the war began, Bitcoin has risen more than 5%, trading back above $69,000, while the IGV ETF has fallen more than 2%. This performance gap indicates investors are starting to treat Bitcoin differently, potentially as a macro hedge against geopolitical uncertainty, while rotating out of software stocks.
The correlation data underscores the dramatic shift. From early February, Bitcoin and IGV were almost perfectly correlated, close to 1.0. After the conflict started, that correlation collapsed to just 0.13, signaling near-total decoupling, before partially recovering to around 0.7.
The divergence is attributed to differing market pressures. The IGV ETF, heavily weighted toward companies like Microsoft, Oracle, and Salesforce, is being hit by investor fears that artificial intelligence will compress profit margins and valuation multiples across the software sector, particularly in Software as a Service (SaaS). Bitcoin, conversely, is increasingly trading on its own macro narrative.
Despite the recent decoupling, both assets remain down year-to-date by roughly 10-21%, with Bitcoin trading about 30% below its October 2025 all-time high after a peak-to-trough decline of approximately 50%. Analysts note the key technical level for Bitcoin is the $67,000 range, which has flipped from resistance to support. A hold above this level could see Bitcoin target the $74,000–$75,000 resistance zone, with a bullish case projecting a move toward $75,000–$78,000 if macro-hedge demand persists.
