Bitcoin's Divergence from Software Stocks Raises Speculation of an Upcoming Rally

Bitcoin's relationship with software stocks has broken down, with the two assets moving sharply apart in recent weeks. The iShares Expanded Tech-Software Sector ETF (IGV) has rallied 36% since early April, reclaiming its 200-day moving average and signaling a return to a long-term uptrend.

The 20-day rolling correlation between bitcoin and IGV has fallen to 0.58, a level last seen before major bitcoin rallies in late 2023 and mid-2024. Previous episodes of similarly low correlation were followed by bitcoin significantly outperforming in the months ahead.