Bitcoin Retreat Deepens as Software and Private Equity Selloff Pulls Down Equities and Digital Assets

The cryptocurrency market faced renewed pressure on Monday as Bitcoin failed to sustain an overnight recovery, sliding back alongside a broader rout in U.S. equities driven by collapsing software stocks and tumbling private equity shares. Market observers note that crypto has traded in near-perfect correlation with embattled technology sectors, raising questions about Bitcoin's positioning as a safe-haven asset.

Bitcoin Loses Ground as Risk-Off Sentiment Returns

Bitcoin retreated to $65,400 during U.S. trading hours Monday, unable to maintain a modest overnight bounce. The decline represented a 3.5% drop over the past 24 hours as of midday Eastern time, reflecting broader weakness across risk assets.

The pullback came amid significant pressure on U.S. equity markets. The S&P 500 and Nasdaq 100 both fell more than 1%, dragged down by renewed selling in software companies and private equity firms. This weakness underscores the tight correlation between cryptocurrency prices and traditional technology sectors that has emerged in recent months.

Software Sector Correlation Signals Trouble

The iShares Expanded Tech-Software ETF (IGV) plunged another 5% to a fresh 52-week low on Monday, extending losses that now total nearly 35% since October. The decline reflects mounting investor concerns that generative artificial intelligence tools could fundamentally disrupt established software business models.

Whether these fears prove justified or not, current market sentiment has effectively equated crypto with software stocks. Price movements between Bitcoin and IGV have recently shown near-perfect correlation, with digital assets following the software sector's downward trajectory almost lockstep.

Private Equity Losses Amplify Credit Concerns

Compounding market anxiety, private equity shares continued their descent amid worries that AI-driven disruption could trigger a major credit event reminiscent of the 2008 global financial crisis. These firms carry substantial exposure to the struggling software sector, making them particularly vulnerable.

Blue Owl Capital (OWL) dropped another 3.5% Monday and sits 32% lower year-to-date, following last week's emergency asset sales aimed at satisfying investor liquidity demands. Other major players saw even steeper losses: BlackStone (BX), Ares Management (ARES), and Apollo Global Management (APO) all fell between 6% and 8%, adding to already significant recent declines.

Digital Gold Narrative Weakens

Bitcoin's behavior during Monday's selloff highlighted its continued tendency to trade as a high-beta proxy for technology stocks and broader liquidity conditions rather than as an independent store of value.

"Investors pulled back from speculative assets like crypto, with bitcoin behaving more like a high-beta risk play than 'digital gold,'" said Joel Kruger, market strategist at LMAX Group, in a note to clients.

While Bitcoin has managed to hold above its worst early February lows, it remains trapped in a tight trading range between $60,000 and $70,000 as risk appetite stays fragile across markets.

Tariff Uncertainty Adds to Market Pressure

Additional uncertainty stems from evolving trade policy after the Supreme Court recently restricted President Trump's previous use of sweeping tariffs. This development "sparked a classic risk-off environment," according to Kruger, further dampening investor appetite for speculative positions.

The confluence of software sector weakness, private equity distress, credit concerns, and policy uncertainty has created a challenging environment for cryptocurrency markets, with Bitcoin's price action reflecting its tight linkage to broader risk sentiment rather than defensive characteristics.

Coinasity's Take

Bitcoin's recent price action delivers an uncomfortable truth for long-term holders: the "digital gold" narrative remains aspirational rather than realized. When risk-off conditions emerge, Bitcoin continues trading as a leveraged bet on tech sector liquidity rather than a portfolio hedge. The near-perfect correlation with software stocks (IGV) is particularly concerning, suggesting crypto hasn't achieved the asset class independence many advocates claim. Until Bitcoin can demonstrate genuine safe-haven characteristics during market stress—rather than amplifying equity losses—investors should view it primarily as a high-beta speculation tool. The current $60,000-$70,000 range may hold for now, but meaningful upside likely requires a broader restoration of risk appetite across technology and growth assets.