Software stocks slide on AI fears and what it means for bitcoin price

Investors are increasingly debating how artificial intelligence disruption, and its effect on software shares, could reshape the bitcoin price over the coming months.

Software stocks slump as AI disruption fears escalate

Software stocks have come under sustained pressure as investors reassess how rapidly advancing AI tools could upend existing business models and margins across the sector.

According to the Global Markets Investor, the iShares Expanded Tech-Software Sector ETF (IGV) has dropped 15% in February alone, putting it on track for its worst monthly performance since 2008. Moreover, the ETF is now testing its April 2025 lows and trades roughly 35% below its peak.

“Software stocks are having their WORST month since the Great Financial Crisis,” the post added, underscoring the depth of the current correction in growth-oriented technology names.

Anthropic’s new code tool rattles cybersecurity leaders

Artificial intelligence sits at the center of this drawdown, with investors unloading shares of companies seen as vulnerable to disruption from powerful code and automation systems.

On February 20, Anthropic unveiled “Claude Code Security,” a new capability embedded within Claude Code that scans codebases for security vulnerabilities. The tool recommends targeted patches for human review and aims to surface issues that traditional security products may miss.

The announcement sparked an immediate cybersecurity market reaction. According to The Kobeissi Letter, CrowdStrike shed $20 billion in market value within two trading sessions, while IBM shares fell more than 10% over the same period.

Commenting on the rout, Holger Zschaepitz, Senior Editor at the Economic and Financial desk of German daily Die Welt and its Sunday edition Welt am Sonntag, said the selloff has been particularly severe in security names. However, he stressed that even a Goldman Sachs basket of supposedly AI-immune software stocks has come under heavy pressure, illustrating that “there is nowhere to hide when it comes to software stocks.”

AI scenario report deepens concerns about the economy

Pressure on technology shares intensified again on Monday after Citrini Research released a report modeling a hypothetical scenario dated June 2028 in which AI automation significantly boosts corporate profitability.

At the same time, the report outlines substantial disruption to white-collar employment, weaker consumer demand, rising credit stress, and long-term economic frictions. Moreover, it frames these dynamics as a “scenario, not a prediction,” aimed at exploring potential left-tail risks as AI makes the economy “increasingly weird.”

Following publication, shares of delivery, payments, and software companies moved lower, reflecting ongoing unease about how deeply automation could reshape both corporate earnings and labor markets.

Rising tech volatility tightens its grip on Bitcoin

The impact of this software-led selloff has not been limited to traditional equity markets. Grayscale noted that recent bitcoin trading patterns have closely tracked US software stocks during the latest wave of risk-off selling.

Several analysts have highlighted that software stocks slide episodes increasingly coincide with sharp swings in digital assets. That said, this correlation suggests that, rather than acting as a defensive hedge, Bitcoin has at times traded like a high-beta extension of the tech complex.

Consequently, if software shares and vehicles such as the software ETF IGV remain under pressure, cryptocurrencies may also struggle. Prolonged weakness in high-growth equities can tighten financial conditions through wealth effects, higher equity risk premia, greater volatility, and systematic deleveraging across high-beta assets.

Those dynamics can weigh directly on the bitcoin price, particularly when leveraged investors trim exposure across both listed technology names and crypto holdings at the same time.

Could Bitcoin eventually decouple from software stocks?

However, some market participants see room for a future decoupling between Bitcoin and software shares if macro narratives evolve. In that case, investors could increasingly frame the asset as a monetary hedge rather than a pure tech proxy.

If capital begins to rotate into Bitcoin as protection against AI-driven labor disruption, currency debasement, or aggressive policy responses such as large stimulus programs, its alignment with software equities may weaken. Moreover, a shift toward viewing Bitcoin as digital collateral or insurance could reduce its sensitivity to swings in the stock market.

For now, correlations remain elevated and tech volatility continues to ripple across digital assets. Investors watching AI developments, earnings expectations, and macro policy signals will be closely monitoring how both software stocks and Bitcoin respond into and beyond 2025.

In summary, accelerating AI innovation has triggered a sharp repricing in software and cybersecurity leaders, and that tech volatility is increasingly shaping crypto performance as traders reassess risk across the entire digital asset landscape.