💥 AI Shockwave Hits Wall Street: Software Stocks Suffer Worst Rout Since 2008 — And Bitcoin May Be Next

A sudden wave of anxiety about artificial intelligence isn’t just reshaping boardroom strategy — it’s rattling global markets.

Software companies, long treated as the backbone of the digital economy, are now at the center of a sharp selloff as investors grapple with an uncomfortable question: What happens when AI starts replacing the very tools these companies sell?

The technology-heavy software sector is enduring its most punishing month since the Global Financial Crisis.

The iShares Expanded Tech-Software Sector ETF, managed by iShares, has plunged 15% in February alone, leaving it roughly 35% below its previous peak and testing lows last seen in April 2025.

For a sector that once symbolized unstoppable growth, the reversal has been swift — and deeply psychological. Investors are no longer asking how fast software can grow, but whether AI could commoditize it altogether.

At the heart of the selloff lies a growing belief that modern AI tools may collapse traditional software business models by automating tasks that once required expensive enterprise platforms.

That fear intensified on February 20, when Anthropic unveiled Claude Code Security, a feature designed to scan entire codebases, detect vulnerabilities, and recommend fixes — work historically handled by specialized cybersecurity software and consultants.

The market reaction was immediate.

Investors suddenly saw a future where AI platforms don’t just assist developers — they replace layers of the software stack.

Even companies previously viewed as insulated from AI disruption, including baskets tracked by Goldman Sachs, have come under pressure.

Market nerves worsened after Citrini Research released a forward-looking scenario set in June 2028.

The report described a paradoxical economy where:

The firm emphasized the exercise was not a prediction, but rather a model of an underexplored “left-tail risk” — a plausible but unsettling outcome of rapid AI adoption.

Markets didn’t wait to debate nuance. Delivery platforms, payments firms, and software names all slid further.

The tremors are no longer confined to equities.

Digital asset manager Grayscale observed that Bitcoin has been trading in lockstep with U.S. software stocks during the downturn, challenging its popular narrative as a hedge.

Instead of behaving like digital gold, Bitcoin has at times acted more like a high-beta extension of the tech trade — rising with growth optimism and falling when risk appetite evaporates.

That linkage creates a new vulnerability:

This isn’t just another valuation reset driven by interest rates or earnings cycles.

This selloff questions the long-term relevance of traditional software economics in a world where AI can generate code, secure systems, and automate workflows at near-zero marginal cost.

In past tech corrections, innovation eventually rescued valuations.
This time, innovation itself is the disruptor.

Markets now face two competing futures:

If AI erodes employment and compresses pricing power, software profits — and the assets tied to them — could remain under structural pressure. Bitcoin, correlated with tech, may struggle alongside them.

If investors begin to see AI as destabilizing labor markets, currencies, or fiscal policy, Bitcoin could decouple and re-emerge as a hedge against systemic change.

Wall Street is confronting a strange reality:
The very technology expected to fuel the next decade of growth may be rewriting the rules faster than markets can price them in.

For now, investors aren’t celebrating AI’s productivity boom.
They’re trying to figure out who survives it.