Bitcoin Decouples From Software Stocks as Iran War and AI Reshape Market Dynamics

Bitcoin had earlier challenged $74,000, raising expectations that the rebound in risk assets would continue. But escalating tensions involving Iran pushed oil prices higher, while investors scaled back expectations for Federal Reserve rate cuts ahead of U.S. employment data. More cautious derivatives positioning added pressure on the cryptocurrency rally.

The latest bout of selling briefly sent Bitcoin down 3.5%. It later recovered to about $71,100, nearly 2% below its previous high, after dipping below $71,000. ETH and DOGE also weakened. In contrast, the iShares Expanded Tech-Software Sector ETF (IGV) rose about 2%.

The Iran war has heightened geopolitical risks and deepened losses in U.S. stocks, prompting investors to adopt more defensive positions. As a volatile asset, Bitcoin has again come under pressure from risk-off sentiment and caution ahead of U.S. inflation data, with $70,000 emerging as a key level for the market.

In the latest trading, Bitcoin briefly fell back to about $69,500 and remained pinned below $70,000, while AI tokens bucked the trend. Internet Computer (ICP) rose more than 8% following its listing on South Korean exchange Upbit, while Fetch.ai (FET) was also buoyed by upbeat comments from Nvidia CEO Jensen Huang.

Bitcoin earned its “digital gold” label from its scarce supply and inflation-resistant properties. But since institutions began adding it to multi-asset portfolios through spot ETFs, its trading has increasingly been driven by interest rates, the dollar and global liquidity. Strategy’s leveraged Bitcoin-buying model has further linked crypto risk with software stocks, making Bitcoin behave more like a high-beta growth asset and raising questions about whether investors can rely on it for diversification.

By the end of February 2026, Bitcoin’s 30-day correlation with the iShares Expanded Tech-Software Sector ETF (IGV) had risen to 0.73 and had remained above 0.5 for more than 18 months. Bitcoin had also fallen 50% from its October 6, 2025, peak of $126,210. NYDIG said on March 8, however, that the 90-day correlation was close to 0.5, meaning equities could explain only 25% of Bitcoin’s price movements. Both assets are influenced by macroeconomic conditions and liquidity, which is not yet sufficient evidence of structural convergence.