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Software stocks have faced notable market headwinds amid growing investor concerns about AI disruptions.
The broader correction in stocks also raises concerns for Bitcoin (BTC), which closely tracks software stocks.
Why did the software company’s stock fall?
The global markets investor revealed that the iShares Expanded Tech-Software Sector ETF (IGV) fell 15% in February alone, leaving behind its worst monthly performance since 2008. The fund is currently testing its lowest levels since April 2025 and is about 35% below its peak.
Mention published in Twitter Software stocks have had their worst month since the Great Financial Crisis.
Artificial intelligence technologies are at the heart of this latest decline, as investors sell shares of companies seen as vulnerable to disruption by advanced AI tools. The decline has accelerated in recent days following two major developments.
On February 20, Anthropic announced the introduction of “Claude Code Security,” a new feature built into Claude Code. The tool scans code bases to detect vulnerabilities, suggests targeted fixes for human review, and aims to detect and address issues that traditional security tools may overlook.
The announcement prompted an immediate response in cybersecurity stocks. Kobeci’s letter stated that CrowdStrike wiped $20 billion from its market value in just two trading sessions. In addition, IBM shares fell more than 10%.
“Software stocks continue to sell off, and cybersecurity stocks in particular are under significant pressure after the release of Anthropic’s Claude Code Security out of concern that this code-focused tool will change the industry,” said Holger Schapetz, senior editor in the economics and finance section of the German newspaper Die Welt and its weekly edition Welt am Sonntag. This suggests that there is nowhere to hide when it comes to stock software. Even Goldman Sachs’ basket of software stocks that are supposedly impervious to AI has come under severe pressure lately.
The pressure intensified again on Monday after Cetrini Research published a report. The report presents a hypothetical scenario in June 2028 where AI automation drives higher corporate profits.
At the same time, the report describes significant disruptions in white-collar jobs, weak consumer demand, growing credit stress and structural economic challenges.
“This scenario is not a prediction, but is only intended to model a scenario that has not been explored much to date,” the report said. “We hope you’ll come away from reading better equipped to deal with the potential left-tail risks as the economy becomes stranger with AI.”
After the report was released, shares of delivery, payments and software companies fell.
Increasing technology volatility tightens Bitcoin’s grip
Grayscale confirmed that the impact is not limited to traditional stock markets, as it observed that the movement of the price of Bitcoin closely mirrored the movement of American software stocks during the recent wave of sales.
Many market participants have pointed to a correlation between US software stocks and Bitcoin. This suggests that Bitcoin, instead of acting as a hedging tool, has sometimes traded as a high-beta extension of the technology sector.
If software stocks continue to weaken, Bitcoin could also come under pressure. Continued weakness in high-growth stocks could contribute to strengthening financial conditions through wealth effects, rising equity risk premiums, higher volatility and systemic deleveraging across all high-beta assets, including cryptocurrencies.
However, performance divergence can still occur. If investors begin to see Bitcoin as a monetary hedge against structural disruptions in the labor market induced by artificial intelligence, the deterioration of the currency, or policies in response to a strong economic stimulus, the correlation of Bitcoin with software stocks may weaken.
