Bitcoin's "Identity Crisis": Why Is It Becoming Less Like a Safe-Haven Asset?

Written by: Machines & Money

Translated by: AididiaoJP, Foresight News

Everyone is asking the wrong questions

Since Bitcoin hit a record high of $126,000 on October 6, 2025, it has fallen by 50%.

Gold, on the other hand, reached a new all-time high of $5,595 on January 29, 2026.

Since Bitcoin peaked, gold has risen over 25%, while Bitcoin’s price has been cut in half.

The “Fear and Greed Index” in the crypto market dropped to an unprecedented 5 on February 6, a number more extreme than during the COVID-19 pandemic or the FTX collapse, and only barely rebounded into the teens afterward.

Commentators in the crypto space have resumed their old debate: Is Bitcoin really digital gold?

But this question itself is wrong; it assumes Bitcoin’s asset identity is fixed. In reality, Bitcoin’s behavior patterns have changed significantly multiple times under different macroeconomic environments. In 2017, it followed gold; in 2021, it tracked tech stocks; and from late 2024 to now, it has been tightly linked to software stocks.

For institutional investors, a more meaningful question is: Under current liquidity conditions, what factors are actually driving Bitcoin’s movements?

Based on evidence up to February 2026, the answer is: Bitcoin’s current performance is akin to a high-volatility software stock. Whether this is a temporary phenomenon caused by sensitivity to the same macro factors or a permanent redefinition of Bitcoin’s role in portfolios remains to be seen, but the data is increasingly hard to ignore.

How strong is this correlation? How long has it lasted?

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

By late February 2026, their 30-day rolling correlation coefficient reached about 0.73. More importantly, this correlation above 0.5 has persisted for over 18 months. This duration clearly exceeds the typical 3-6 months of short-term style shifts but is not long enough to confirm a permanent change across an entire market cycle (4-7 years).

The recent downturn has made this relationship more apparent. By late February 2026, IGV had fallen about 23% this year, and Bitcoin about 19-20%. IGV, facing its worst quarter since the 2008 financial crisis, has seen nearly identical movements with Bitcoin over the past month and three months, indicating their gains and losses are very closely aligned. During the decline, Bitcoin’s volatility was roughly 1.1 to 1.3 times that of software stocks, lower than many expected 2-3 times.

One point to note: During market turbulence, regardless of whether assets are fundamentally related, short-term correlations can spike because risk appetite tends to decline simultaneously. But this high synchronization has lasted over 18 months, suggesting there is more than just random fluctuation behind it. Still, this does not prove causality or that the relationship will last forever.

2025: A major test for “safe-haven asset” status

If any year could test whether Bitcoin truly hedges against currency devaluation, it’s 2025. That year, fiscal expansion accelerated, the dollar weakened, geopolitical risks escalated, inflation remained stubbornly high, and market expectations for Fed rate cuts grew stronger.

This should have been an ideal environment for Bitcoin to demonstrate its “digital gold” qualities. But what actually happened told a different story: gold rose from $4,400 to a new high of $5,595, while Bitcoin fell from $126,000 to over $60,000. These two assets, both claimed to serve as inflation hedges, moved in completely opposite directions when conditions were most favorable for their inflation-hedging roles. The result:

Gold hit a record $5,595 on January 29, 2026. Central banks bought 863 tons of gold in 2025, the third consecutive year of large-scale purchases. Not a single central bank bought Bitcoin.

The huge difference in capital flows is the strongest rebuttal to the “digital gold” theory: when major institutions and sovereign funds truly need safe havens to protect against macro risks, they allocated over three times more funds to gold than to Bitcoin.

This is not to say Bitcoin will never become a safe-haven asset. But at this moment, based on current investor structures, market conditions, and liquidity environments, it has yet to do so. In 2025, both Bitcoin and tech growth stocks delivered only modest single-digit returns, while traditional hard assets performed remarkably well. In this major test, Bitcoin and tech growth stocks exhibited highly correlated behavior, providing strong evidence that “the two are converging.”

Why is this happening? Three structural reasons

1. The way institutional funds operate has changed

The emergence of Bitcoin ETFs has fundamentally altered its trading approach at the institutional level.

As a result, Bitcoin is now considered within the same investment framework as software stocks. Risk management systems treat them equally; when adjusting portfolios, institutions buy or sell both simultaneously, often evaluating them together as part of the tech sector. When a multi-asset fund finds growth stocks too risky and needs to reduce exposure, it will sell both software stocks and Bitcoin in the same transaction.

This creates a self-reinforcing cycle: because institutions categorize Bitcoin as a tech stock, its capital flows become synchronized with tech stocks; this, in turn, reinforces their classification. It’s estimated that the average cost basis for U.S. spot Bitcoin ETF holders is around $90,000. With the current price near $64,000, the entire ETF’s institutional capital is suffering a 25-30% unrealized loss. This gap is significant because it turns what might have been long-term holdings into persistent selling pressure. Those who believed ETF investments could diversify risk or serve as hedges now see gold ETFs rising while their Bitcoin holdings are in loss. Since early 2026, we’ve observed a chain reaction of ETF redemptions and Bitcoin price declines, with record-long fund outflows. For example, just one of BlackRock’s IBIT funds has lost over $2.1 billion in five weeks.

2. Their “sensitivity points” to macro conditions are similar

Bitcoin and software stocks are both sensitive to macroeconomic signals: changes in real interest rates, the amount of money in the market (M2), Fed’s monetary policy (printing or tightening), dollar strength, and overall risk appetite (measured by VIX and credit spreads). They are both “long-duration” assets sensitive to interest rates: when real rates fall, they rise; when real rates rise, they fall. When liquidity is abundant, they benefit; when liquidity tightens, they suffer.

A key question is: does Bitcoin only correlate with software stocks, or does it also relate to all growth assets sensitive to liquidity? Evidence favors the latter. Bitcoin’s price movements are not driven by the profitability of software companies but by the macro environment that also depresses software valuations and pulls money out of speculative assets. This correlation reflects their shared sensitivity to macroeconomic conditions, not an intrinsic similarity.

Sometimes, the transmission mechanism is surprisingly direct. In February 2026, two unrelated AI product launches affected Bitcoin prices through the “institutional pipeline” described above. This is a real-world example of correlation.

The VIX index also illustrates this. When VIX surges due to inflation data, both Bitcoin and software stocks decline. But when VIX drops from high levels, they don’t necessarily benefit much. This aligns with the characteristics of high-volatility growth stocks rather than safe-haven assets.

Understanding this distinction is crucial. If correlation is merely due to shared macro sensitivity, then a change in macro conditions could cause Bitcoin to decouple from software stocks, even if nothing major happens to Bitcoin itself. Past examples include Bitcoin’s 2017-2018 synchronization with gold and its 2021-2022 correlation with the Nasdaq, both of which ended as macro environments shifted.

3. MicroStrategy’s “Amplifier” effect

MicroStrategy (formerly Strategy) is the largest publicly traded holder of Bitcoin, and it’s classified as a software/tech company on Nasdaq. This creates a direct, mechanical link, tying the “popularity” of Bitcoin to the performance of the software sector.

This cycle is bidirectional. When the software sector underperforms, MicroStrategy’s stock price drops. A falling stock price then worsens market sentiment toward Bitcoin, even causing some actual selling. During market downturns, this loop tightens the relationship between Bitcoin and software indices. Since late 2025, MicroStrategy’s stock has fallen about 67% from its peak, far more than the declines in software ETFs or Bitcoin itself. Its market cap now even dips below the value of its Bitcoin holdings, effectively a discount sale. This indicates that, beyond the correlation between Bitcoin and software stocks, there’s an additional amplification effect driven by MicroStrategy’s own dynamics.

In January 2026, MSCI considered removing companies holding more than half their assets in digital assets from certain indices. If implemented, this could force large-scale sell-offs. It highlights how companies like MicroStrategy, with significant Bitcoin holdings, are vulnerable to traditional financial rules. Although MSCI has not yet acted, the risk remains.

What does the future hold? Three possible frameworks

Framework 1: Bitcoin has become a leveraged software stock (identity has changed)

This view argues that Bitcoin has been permanently redefined. Evidence includes the high correlation of 0.73, near-synchronous price movements, synchronized ETF capital flows, and shared institutional investors. Under this framework, the ETF era has embedded Bitcoin into tech portfolios, permanently altering its risk profile. This correlation will persist regardless of market cycles.

The problem is, history doesn’t support this. Bitcoin itself hasn’t changed; between 2014 and 2019, its correlation with software stocks was nearly zero. It has also shown high correlation with other assets (like alternative tech coins in 2017-2018, Nasdaq in 2021-2022), but these were temporary. To prove permanence, it must withstand a full cycle of rate hikes and cuts, which has not yet happened.

Framework 2: Both are just reflections of “market liquidity” (cyclical convergence)

This simpler explanation states that both Bitcoin and software stocks are “long-duration” assets highly sensitive to liquidity. Their synchronized movements started during the 2020 liquidity surge, intensified during the 2022 tightening, and have persisted in the current environment of tight liquidity.

According to this view, when the next easing cycle begins (Fed easing again), this synchronization could break. Historically, Bitcoin tends to lead software stocks by one or two months when policy shifts. Additionally, Bitcoin’s “halving” events (which historically trigger price rallies 12-18 months later) could cause it to diverge from software stocks by late 2026.

Framework 3: When markets tighten, Bitcoin “herds” with stocks (behavioral convergence)

Bitcoin is inherently a high-volatility risk asset. During panic sell-offs, regardless of its fundamentals, it tends to behave like stocks. This is driven by “risk-off” sentiment. When VIX spikes, both fall together. Sometimes, big narratives—like fears that AI disruption will devalue tech companies—also impact software valuations and risk appetite, further synchronizing their movements.

In February 2026, the crypto Fear & Greed Index hit a record low, but not because of a major crypto event; rather, because all growth assets were being sold off due to macro and tech sector concerns. The most pessimistic sentiment in Bitcoin’s history was caused by the same reasons as software stocks.

Current evidence most supports “Framework 2” (cyclical convergence), but mechanisms described in “Framework 1” (institutional operations) are also prolonging this synchronization in the current environment.

What’s next? Several scenarios

Honestly, we can’t be certain which will happen. But understanding these possibilities helps us look for signals that could rule out some options.

Scenario 1: Correlation persists (the baseline). If liquidity remains tight through 2026, Bitcoin will continue to behave like a high-volatility growth stock, maintaining a correlation of 0.5 to 0.8 with software ETFs. The fundamental question of what Bitcoin truly is remains unanswered. As long as Fed policies, institutional holdings, or Bitcoin’s own fundamentals don’t change significantly, this is the most likely outcome.

Scenario 2: Decoupling. If the Fed begins easing again, combined with the effects of the 2024 halving and waning fears of AI disruption, Bitcoin could outperform software stocks significantly in late 2026. Its correlation might drop to 0.3-0.5. Such a development would confirm that “cyclical convergence” is only temporary, and the current synchronization is just a phase.

Scenario 3: Permanent convergence. If correlation rises above 0.8 and remains throughout a full easing cycle, with major indices classifying Bitcoin as part of the tech sector, then Bitcoin’s identity would have truly changed permanently.

The key test is simple: if correlation breaks during Fed easing, it indicates cyclical convergence. If they stay tightly linked despite easing, then “identity has changed” becomes the main explanation.

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

Conclusion

Bitcoin’s identity has never been fixed. It is always what the market’s main buyers believe it to be. Currently, those buyers are institutional investors treating it as a growth stock. This could change again, but Bitcoin’s core fundamentals haven’t. Market pricing depends on who holds it and why, not its original purpose. Until the next major market shift, this synchronization is the reality. For anyone trying to understand what role Bitcoin can play in their portfolio today, reality is everything.