Bitcoin and Software Stocks Diverge, Analysts Predict Major Crypto Move

The relationship between Bitcoin and software stocks has undergone significant changes in recent months. Historically, the two assets have moved almost in lockstep, but since May 14, they have sharply diverged. The iShares Expanded Tech-Software Sector ETF (IGV) has gained roughly 12%, while Bitcoin has fallen about 10%.

This disconnect marks one of the largest between the two assets in recent years and is a departure from their long-standing correlation. In the past, such periods of low correlation have been short-lived, with either Bitcoin catching up to software stocks or IGV's recovery proving temporary.

The 20-day rolling correlation between Bitcoin and IGV has fallen to 0.58, a level last seen in October 2023 when Bitcoin was trading near $25,000 before rallying to $70,000 over the following six months. A similar period of low correlation occurred during the summer of 2024, shortly before Bitcoin surged toward $100,000.