20-day correlation with IGV drops to 0.58 as tech sector rallies
Bitcoin and software equities have sharply diverged after moving in lockstep for years, raising questions over whether bitcoin will eventually catch up.
Bitcoin’s 20-day rolling correlation with the iShares Expanded Tech-Software Sector ETF (IGV) has fallen to 0.58, marking a breakdown in the relationship that has defined both assets since 2021. The split began on May 14, when IGV began staging a recovery that has now produced 12% gains, while bitcoin declined 10% over the same period.
The divergence comes after both assets entered significant drawdowns from October 2025 all-time highs. Bitcoin has fallen 50% from its peak, while IGV has shed 37%. Yet their recent trajectories could not be more different. IGV has rallied 36% since April 10, reclaiming its 200-day moving average at 104 in pre-market trading Monday, closing at 98 the prior Friday. Bitcoin, by contrast, is trading near $73,000, nearly 10% below its 200-day moving average of $79,388.
For most of the past five years, bitcoin functioned as a high-beta technology asset, moving almost perfectly with software stocks represented by IGV. The sector’s weakness stemmed from fears that artificial intelligence would disrupt traditional software business models, a narrative dubbed the “SaaS apocalypse” that triggered broad selling pressure across names including Oracle, Microsoft, and Palantir.
The current correlation breakdown is not unprecedented. Similar low correlation periods occurred in October 2023, when bitcoin was trading near $25,000, and again in summer 2024. Both episodes were followed by significant bitcoin rallies. In the October 2023 case, bitcoin rallied to $70,000 within six months.
Historically, periods of low correlation between bitcoin and IGV have not lasted long. The current divergence raises the question of whether bitcoin will catch up to software equities’ recovery, or whether IGV’s bounce represents a more durable shift in market dynamics.
The timing coincides with broader weakness in spot bitcoin products. Net outflows from spot bitcoin ETFs totaled $2.97 billion over a 10-day period, adding to selling pressure on the asset.
