Low bitcoin-software correlation suggests a major move may be approaching
Bitcoin and software stocks, long treated as closely linked high-beta tech trades, have recently diverged sharply. Since May 14, the software ETF IGV has risen about 12% while bitcoin has fallen roughly 10%, one of the biggest gaps in years. Both assets had previously peaked in October 2025 and then sold off, with bitcoin down about 50% from highs and IGV down about 37%. Software weakness was driven by fears that AI could disrupt SaaS business models, pressuring names like Oracle, Microsoft, and Palantir. IGV has rebounded strongly since early April, up 36% and back above its 200-day moving average. Bitcoin remains below its own 200-day average. The 20-day correlation between bitcoin and IGV has dropped to 0.58, a level that has historically preceded either bitcoin catching up or a temporary software rally stall. Right now, IGV’s momentum makes a continued software recovery seem more credible.
