Bitcoin’s Correlation with Equities and Tech Sector Weakness
Bitcoin experienced a modest rebound Monday, February 23, 2026, quickly reversing course as broader risk markets declined. Trading at $65,400, Bitcoin was down 35% over the past 24 hours, mirroring a downturn in U.S. Equities. The S&P 500 and Nasdaq 100 both fell by over 1%, driven by weakness in software and private equity stocks.
Tech Sector Concerns Drive Market Sentiment
The iShares Expanded Tech-Software ETF (IGV) dropped another 5% to a 52-week low, declining nearly 35% since October amid concerns that generative AI tools could disrupt traditional software business models. Market sentiment increasingly views crypto as an extension of the software sector, resulting in a near-perfect correlation between Bitcoin’s price movements and the IGV.
AI and Potential Credit Event Risks
Adding to the bearish outlook are worries that the rise of AI could trigger a major negative credit event, reminiscent of the 2008 global financial crisis. This concern is reflected in the performance of private equity firms, which have significant exposure to the software sector. Blow Owl Capital (OWL) saw a further 3.5% decline on Monday, with a year-to-date loss of 32%. Blackstone (BX), Ares Management (ARES), and Apollo Global Management (APO) also experienced substantial losses, falling between 6% and 8%.
Bitcoin as a High-Beta Proxy
Crypto often functions as a high-beta proxy for tech and overall liquidity conditions, and Monday’s market weakness underscored this dynamic. While Bitcoin has so far remained above its early February lows, it continues to trade within a narrow range of $60,000 to $70,000 as risk appetite remains subdued.
Tariff Uncertainty Adds to Market Pressure
Uncertainty surrounding global tariffs, following the Supreme Court’s restrictions on President Trump’s previous use of sweeping levies, contributed to a risk-off environment. According to Joel Kruger, market strategist at LMAX Group, investors pulled back from speculative assets like crypto, with Bitcoin behaving more like a high-beta risk play than “digital gold.”1
Bitcoin’s Evolving Relationship with Equities
Historically considered a diversifier, Bitcoin’s relationship with equities has shifted significantly in recent years. Data indicates a positive correlation between Bitcoin and major equity indices like the S&P 500 and Nasdaq-100, particularly since 2020. 2 This suggests Bitcoin’s performance is increasingly tied to broader economic and market conditions, especially during periods of market stress. 2
Recent Market Breakouts
As of July 14, 2025, the S&P 500, Nasdaq 100, and Bitcoin all experienced breakouts on weekly timeframes. 3 Bitcoin surged 9% on light volume, signaling a potentially positive start, though sustained momentum may require increased trading volume. 3
1 Shukla, S., & Shen, M. (2026, February 5). After Slump, Bitcoin Now Trails S&P 500, Nasdaq 100, Gold Over Five Years. Yahoo Finance. https://finance.yahoo.com/news/bitcoin-trails-p-500-nasdaq-155750909.html
2 CME Group. (2025, November 18). Why Bitcoin’s Relationship with Equities Has Changed. https://www.cmegroup.com/openmarkets/economics/2025/Why-Bitcoins-Relationship-with-Equities-Has-Changed.html
3 Fallon, D. (2025, July 14). S&P 500, Bitcoin Breakouts on Weekly Time Frame Join Nasdaq 100. Investing.com. https://www.investing.com/analysis/sp-500-bitcoin-breakouts-on-weekly-time-frame-join-nasdaq-100-200663595