Bitcoin and software stocks have recently shown significant divergence, which could indicate potential movements in the cryptocurrency market.
The iShares Expanded Tech-Software Sector ETF (IGV) has surged by 36% since April 10, recovering its 200-day moving average. This upward trend comes amid concerns regarding AI's impact on traditional software firms. In contrast, Bitcoin's correlation with IGV has dropped to 0.58, a level not seen since late 2023 and mid-2024, suggesting a potential for significant price movements in Bitcoin.
Historically, periods of low correlation between Bitcoin and software stocks have preceded substantial gains for Bitcoin. The recent divergence began on May 14, as IGV rose approximately 12%, while Bitcoin fell around 10%. Both assets reached all-time highs in October 2025 but have since experienced notable declines—Bitcoin by nearly 50% and IGV by about 37%—largely due to fears of a "SaaS apocalypse" affecting established software companies like Oracle, Microsoft, and Palantir.
As of now, IGV has closed near 98 and is trading around 104 in pre-market, while Bitcoin is hovering close to $73,000, about 10% below its 200-day moving average of $79,388. Analysts note that previous instances of low correlation have typically led to Bitcoin's recovery or a temporary rebound in IGV. With IGV's current momentum, a sustained recovery seems more plausible than a regression.
