Written by: Machines & Money

Translated by: AididiaoJP, Foresight News

Everyone Is Asking the Wrong Question

Since Bitcoin peaked at a historic high of $126,000 on October 6, 2025, it has now fallen by 50%.

Gold, on the other hand, set a new record high of $5,595 on January 29, 2026.

Since Bitcoin's peak, gold has risen by more than 25%, while Bitcoin's price has been cut in half.

The "fear and greed index" in the cryptocurrency market dropped to an unprecedented 5 on February 6, a number more extreme than during the COVID pandemic and the collapse of the FTX exchange, and later barely recovered to just over ten.

Commentators in the crypto space have started the age-old debate again: Is Bitcoin really digital gold?

However, this question itself is flawed, as it assumes that the identity of Bitcoin as an asset is fixed and unchanging. In fact, under different macroeconomic conditions, Bitcoin's behavior patterns have shown significant changes multiple times. In 2017, it moved with gold; in 2021, it followed tech stocks; and since late 2024, it has been closely tied to software stocks.

For institutional investors, a more practical question is: what factors are currently governing Bitcoin’s price movements in this liquidity environment?

According to evidence available up to February 2026, the answer is: Bitcoin's current performance resembles that of a highly volatile software stock. Whether this is a temporary phenomenon due to their sensitivity to the same macroeconomic factors or a permanent redefinition of Bitcoin's role in investment portfolios remains to be seen, but the data is becoming increasingly hard to ignore.

How Strong Is This Correlation? How Long Will It Last?

The relationship between Bitcoin and IGV (an ETF tracking software stocks) has become increasingly tight over three different time periods:

By late February 2026, their 30-day rolling correlation coefficient had reached about 0.73. More importantly, this high correlation, above 0.5, has been maintained for over 18 months. This duration is significantly longer than the typical short-term style shifts that last only 3-6 months, but not long enough to prove a permanent change across an entire market cycle (4-7 years).

The recent decline has made their relationship even clearer. By late February 2026, IGV had fallen about 23% this year, while Bitcoin had dropped by 19-20%. The IGV software stock ETF is facing its worst quarter since the 2008 financial crisis. Over the past month and three months, Bitcoin and IGV's price movements have closely mirrored each other, indicating their fluctuations are nearly identical. In the downtrend, Bitcoin's volatility was about 1.1 to 1.3 times that of software stocks, which is lower than many assumed would be 2 to 3 times.

One point to note: during market turmoil, regardless of any substantial relationship between assets, short-term correlations may spike as everyone’s risk appetite decreases simultaneously. However, the current high synchrony has persisted for over 18 months, indicating that there’s something more substantial than random movements at play. Nevertheless, this does not demonstrate who causes whom, nor can it prove that this relationship will last indefinitely.

2025: A Major Test of the "Safe-Haven Asset" Identity

If there is a year that can test whether Bitcoin genuinely hedges against currency devaluation risk, it is 2025. That year, fiscal expansion is accelerating, the dollar is weakening, geopolitical risks are escalating, inflation remains stubbornly high, and the market's expectations for Federal Reserve interest rate cuts are growing stronger.

This should have been an ideal environment for Bitcoin to demonstrate its "digital gold" attributes. Yet, what has occurred since October 2025 offers a different answer: gold rose from $4,400 to a historic high of $5,595, while Bitcoin fell from $126,000 to over $60,000. These two assets, endowed with the same "anti-inflation" capabilities, moved in completely opposite directions at the most favorable time for such functions. The result is as follows:

Gold reached an all-time high of $5,595 on January 29, 2026. Central banks purchased 863 tons of gold in 2025, marking the third consecutive year of significant buying. However, no central bank bought Bitcoin.

The massive discrepancy in capital flows is the strongest rebuttal to the "digital gold" thesis: when large institutions and sovereign funds genuinely needed a hedge against the macro environment that Bitcoin should have been able to protect them from, they chose gold at over three to one in terms of fund allocation.

This is not to say that Bitcoin will never become a safe-haven asset in the future. It simply means that at this current point in time, based on the existing investor structure, market state, and liquidity environment, it cannot yet fulfill that role. In 2025, both Bitcoin and software stocks yielded only modest single-digit returns, while traditional hard assets performed extraordinarily well. In this major test, Bitcoin and tech growth stocks exhibited highly consistent behavior, which is one of the strongest pieces of evidence for the view that "the two are converging."

Why Is This Happening? Three Structural Reasons

How Institutional Funds Are Operated Has Changed

The advent of Bitcoin ETFs fundamentally altered the trading dynamics on the institutional level.

As a result, Bitcoin is now placed in the same investment decision framework as software stocks. Risk management systems treat them the same, and when portfolio adjustments are necessary, institutions will buy and sell both asset classes simultaneously, often grouping them in the same technology stock basket for performance evaluation. When a fund with a diversified asset allocation feels that the risks associated with growth stocks are too high and needs to decrease exposure, it will sell off both software stocks and Bitcoin in a single transaction.

This creates a self-reinforcing cycle: because institutions categorize it as a tech stock, its capital flows coincide with those of tech stocks; this synchrony, in turn, reinforces the institutional perception of it as a tech stock. Estimates suggest that the average acquisition cost for holders of US spot Bitcoin ETFs is around $90,000, meaning that with the current price near $64,000, the entire ETF's institutional funds are now showing a loss of 25% to 30%. This cost gap is crucial as it transforms what might have been long-term holding institutional capital into persistent selling pressure. Those who thought buying ETFs would diversify risk or provide a hedge now watch as gold ETFs rise while their own holdings continue to lose value. Since early 2026, we’ve been able to observe the real-time chain reaction of ETF redemptions leading to Bitcoin price declines, with the duration of capital outflows setting a record since the ETF was launched. Just BlackRock's IBIT fund alone has seen over $2.1 billion in outflows in the past five weeks.

They Are Sensitive to the Same Macroeconomic Conditions

Bitcoin and software stocks are sensitive to the same macroeconomic information: changes in real interest rates, whether there is more or less money in the market (M2), whether the Federal Reserve is printing money or withdrawing liquidity, the strength of the dollar, and the overall market's risk appetite (which can be tracked using the VIX fear index and credit spreads). They all belong to the category of "long-duration" assets sensitive to interest rates. When real interest rates decline, they rise; when real interest rates increase, they fall. An abundance of money in the market benefits them; a tightening of funds harms them.

A key question is: Is Bitcoin closely related only to software stocks, or to all growth-type assets sensitive to liquidity? The evidence leans more towards the latter. Bitcoin's fluctuations are not driven by the profitability of software companies but rather by the tightening environment that leads to declines in software stock valuations, which also withdraws money from speculative assets. This correlation reflects their shared "sensitivity" to macroeconomic conditions rather than suggesting that they are fundamentally the same.

However, sometimes the transmission mechanisms can be surprisingly direct. In February 2026, two AI products, unrelated to Bitcoin, were released and impacted Bitcoin’s price. How did they influence it? Through the aforementioned "institutional pipeline." This illustrates the manifestation of correlation in reality.

The VIX fear index can also illustrate the issue. When the VIX spikes due to inflation data, Bitcoin and software stocks both decline. But when the VIX drops from a low level, neither benefits significantly. This aligns perfectly with the characteristics of high-volatility growth stocks, rather than those of safe-haven assets.

Understanding this distinction is vital. If the correlation only arises from their sensitivity to the same macro factors, then once the macro environment shifts, Bitcoin may diverge from software stocks, even if nothing major is happening with Bitcoin itself. There are precedents: Bitcoin synchronized with gold in 2017, with tech stocks in 2021, and both ended as macro conditions changed.

MicroStrategy’s "Amplifier" Effect

MicroStrategy (formerly MicroStrategy) is the publicly traded company that holds the most Bitcoin globally, and on the Nasdaq exchange, it is classified as a software/tech company. This creates a direct, mechanical link between the performance of the software sector and Bitcoin's "popularity."

This cycle is bidirectional. If the software sector struggles, MicroStrategy's stock price will drop. When MicroStrategy’s stock price declines, it exacerbates market pessimism towards Bitcoin and even creates actual selling pressure. During market downturns, this cycle tightens the relationship between Bitcoin and software indices. MicroStrategy’s stock price has already fallen about 67% from its peak at the end of 2025, which is much greater than the declines in software stock ETFs and Bitcoin itself. Currently, this company's market capitalization is even lower than the value of the Bitcoin it holds, effectively trading at a discount. This indicates that, in addition to the correlation between Bitcoin and software stocks, there is an additional layer of amplification from the company itself.

In January 2026, MSCI (Morgan Stanley Capital International) considered removing companies that hold more than half of their assets in digital assets from certain indices. If this were to happen, it could lead to a forced sell-off of significant capital. This highlights how easily companies like MicroStrategy, which hold substantial amounts of Bitcoin, can be affected by traditional financial rules. Although MSCI ultimately did not proceed with this action, the discussion remains, and this risk lingers.

How Will the Future Look? Three Possible Frameworks

Framework One: Bitcoin Has Become a Leveraged Software Stock (Its Identity Has Changed)

This view argues that Bitcoin has been permanently redefined. The evidence includes the previously mentioned aspects: a high correlation of up to 0.73 with software stocks, nearly synchronized movements, synchronized ETF fund flows, and shared institutional investors. Under this framework, the era of ETFs has placed Bitcoin into technology stock portfolios, permanently altering its risk profile. This correlation will persist regardless of market cycles.

The problem with this viewpoint is that history does not support it. Bitcoin itself hasn’t changed, but between 2014 and 2019, its correlation with software stocks was nearly zero. There have been instances when it was highly correlated with other things (for instance, alternative tech coins in 2017-2018, and Nasdaq in 2021-2022), but those ultimately proved temporary. To prove permanence, it would at least need to withstand a full interest rate hike and cut cycle, and that time has not yet come.

Framework Two: They Both Reflect "Is There Money in the Market?" (Cyclical Convergence)

This explanation is simpler. Bitcoin and software stocks are both "long-duration" assets that are very sensitive to liquidity; it is just that they happen to be displaying strong synchrony in the current "money-tight" macro environment. This synchrony began during the liquidity expansion in 2020 and intensified during the contraction starting in 2022, continuing through the current liquidity-tight situation.

According to this framework, once the next easing cycle begins (when the Federal Reserve starts injecting liquidity again), this synchrony may break. Historically, Bitcoin often begins to rise a month or two ahead of software stocks when there is a shift in Federal Reserve policy. Furthermore, Bitcoin itself has supply changes due to "halving" (historical experience shows that 12-18 months after halving tends to bring a market rally), which could lead to it establishing a completely independent trend from software stocks by late 2026.

Framework Three: In Times of Market Stress, Bitcoin Cohesively Moves with Stocks (Behavioral Convergence)

Bitcoin is essentially a high-volatility risk asset. When the market declines in panic, regardless of what it is, it behaves like stocks. At this time, the prevailing sentiment is either "risk-off" or "risk-on." When the VIX fear index surges, both assets drop together. Sometimes, significant narratives (like concerns that AI disruption could render many tech companies worthless) simultaneously affect software valuations and the overall market's risk appetite, further synchronizing their movements. On February 6 of this year, the cryptocurrency fear and greed index hit an all-time low, but this was not due to any major events within the crypto space; it occurred because all growth-type assets were being sold off, caused by macro and tech-sector concerns. The historically most pessimistic sentiment towards Bitcoin was, surprisingly, due to the same reasons affecting software stocks.

Current evidence most supports "Framework Two" (cyclical convergence), but the mechanisms mentioned in "Framework One" (especially how institutional funds operate) are indeed extending this convergence in the current environment.

What Might the Future Hold? Several Possible Scenarios

To be honest, we cannot definitively determine which scenario will transpire. However, we can clarify various possibilities and then look for signals in the future that might allow us to rule out some options.

Scenario One: Correlation Persists (This is the Baseline Scenario). If market liquidity remains tight in 2026, Bitcoin will continue to behave like a high-volatility growth stock, maintaining a high correlation of 0.5 to 0.8 with software stock ETFs. The question of what it exactly is remains unanswered. As long as the Federal Reserve’s policies, institutional positions, or Bitcoin itself undergo no significant changes, this is the most likely outcome.

Scenario Two: Divergence. If the Federal Reserve begins to inject liquidity, coupled with the subsequent effects of the 2024 "halving" and a waning of market concerns about AI disruption, Bitcoin could significantly outperform software stocks in the second half of 2026. Their correlation would drop to 0.3 to 0.5. Should this occur, it would validate "Framework Two" (cyclical convergence), indicating that the current synchrony is merely temporary.

Scenario Three: Permanent Convergence. If their correlation rises above 0.8 and persists throughout the next complete easing cycle, with major index companies formally classifying it within the tech sector, it would indicate that Bitcoin's identity has indeed undergone a permanent change.

The key test criterion is simple. If the correlation breaks when the Federal Reserve begins lowering interest rates and injecting liquidity, it confirms cyclical convergence. If they remain tightly bound even after the easing, then the "identity has changed" becomes the primary explanation.

Until the next easing cycle in 2026-2027 provides an answer, this question remains open.

Conclusion

The identity of Bitcoin has never been fixed. It has always been defined by what the mainstream buyers perceive it to be. And now, the mainstream buyers are institutional investors who regard it as a growth stock. This perception may change in the future, as the fundamental elements of Bitcoin itself have not changed. However, the market values assets based on who holds them, why they hold them, and not on what they were initially designed to do. Before the next significant shift in market conditions, this synchrony represents reality. For anyone who wants to know the role Bitcoin currently plays in their investment portfolio, that reality is everything.