Since the outbreak of the war with Iran on Feb. 28, bitcoin (BTC) has started to diverge from software equities, with the iShares Expanded Tech-Software Sector ETF (IGV), serving as a useful proxy for the sector.

Bitcoin has been one of the strongest-performing assets during this period, rising more than 5% and trading back above $69,000, including a gain of more than 0.5% over the past 24 hours.

IGV, in contrast, has fallen more than 2% since the conflict began. That gap suggests investors are starting to treat bitcoin and software stocks differently, at least in the near term.

Until recently, the two had moved closely together. Over the past three months, bitcoin fell 26% and the ETF lost 23%. Year to date, both are lower by about 21%. Over five years, bitcoin has gained 18% compared with 10% for IGV. In other words, both have moved in the same direction, but the cryptocurrency has done so with much greater volatility.

That is also clear in their declines. Bitcoin had fallen roughly 50% from its October all-time high, while IGV, which peaked slightly earlier, fell about 35% from its own top.

The correlation data tells the same story. From early February, bitcoin and IGV were almost perfectly correlated, close to 1.0, meaning they were moving nearly in lockstep. After the war began, that relationship broke down sharply, with the correlation dropping to 0.13, a level that signals near decoupling, before rebounding to around 0.7. The figure can range between -1.0 and +1.0, with 0 indicating no correlation at all.

Why have software stocks been hit harder?

IGV is heavily weighted toward large software and services companies such as Microsoft (MSFT), Oracle (ORCL) and Salesforce (CRM). Investors are increasingly worried that artificial intelligence will compress margins and valuation multiples across software, especially in Software as a Service (SaaS), as competition rises and barriers to entry fall. Bitcoin, meanwhile, is trading more like a macro asset, benefiting from geopolitical uncertainty.