Bitcoin’s rally earlier this week began to lose momentum on Thursday, even as software stocks staged a strong rebound, marking a divergence between two markets that had been closely correlated in recent months.
Bitcoin slipped nearly 2% over the past 24 hours to trade around $71,400 after retreating from earlier gains once U.S. markets opened.
The decline came as broader equity markets moved lower amid ongoing geopolitical tensions linked to the Iran conflict. Oil prices surged about 5.3% to roughly $78.70 per barrel as concerns grew that the situation could drag on. Meanwhile, the Dow Jones Industrial Average fell 1.4% and the S&P 500 dropped 0.7%.
The tech-heavy Nasdaq Composite held up relatively better, slipping just 0.4% as investors piled into software stocks that had been under pressure in recent months. The iShares Expanded Tech-Software Sector ETF (IGV) rose about 2% on the day and is now up roughly 9% over the past five trading sessions.
The contrasting moves are notable because bitcoin and software stocks have tracked each other closely since October. Both markets declined together amid concerns about artificial intelligence disrupting the software industry and then rebounded in tandem from their recent lows.
However, some analysts remain cautious about bitcoin’s outlook. Arthur Hayes, chief investment officer at Maelstrom, said the cryptocurrency has yet to fully break free from its correlation with the IGV software ETF despite its recent surge toward $74,000.
Whether Thursday’s divergence will persist remains unclear, but the combination of rising software stocks and a retreating bitcoin price is not an encouraging signal for crypto bulls. Hayes warned that the recent bounce could still prove to be a temporary “dead cat bounce.”
Some traders may also be locking in gains ahead of Friday’s closely watched U.S. employment report for February. Recent economic data has frequently come in stronger than expected, lowering expectations that the Federal Reserve will soon resume cutting interest rates.
Derivatives markets on the Chicago Mercantile Exchange now indicate an 88% probability that the Fed will keep rates unchanged at both its upcoming meeting and again in April. Just a month earlier, the odds of a hold were closer to 59%.
Despite the uncertainty, some market participants remain cautiously optimistic. Bryan Tan, a trader at Wintermute, said steady inflows into spot bitcoin exchange-traded funds—nearly $2 billion over the past week—along with stabilizing trading volumes have helped support the market.
Tan also noted that the relatively muted reaction to disruptions around the Strait of Hormuz could allow bitcoin to push back toward the $74,000 to $75,000 range if positive momentum continues.
Meanwhile, analysts at Bitfinex pointed to a “notable increase in spot market strength,” suggesting the latest price gains have been driven primarily by genuine buying demand rather than leveraged speculation.
If that trend continues, they said, the crypto market could experience a period of relief in the weeks and months ahead.
