Bitcoin’s BTC$72,578.05 early-week rally began to fade after U.S. markets opened Thursday, sending the cryptocurrency by nearly 2% over the past 24 hours to $71,400.

The move comes alongside declines in broad equity markets as the Iran war shows little sign of moving to a quick conclusion, sending oil higher by 5.3% to $78.70 per barrel. The Dow Jones Industrial Average is down 1.4% and S&P 500 by 0.7%.

The Nasdaq, though, is down just 0.4% as the previously battered software sector catches a major bid. The iShares Expanded Tech-Software Sector ETF (IGV) is ahead 2% and now up by about 9% over the past five sessions.

That divergence is notable, as bitcoin has been closely linked to the software sector, both tumbling in concert since October amid investor concerns over AI disruption and each bouncing from their lows in tandem in recent days.

New bull or bear market bounce?

Bitcoin "isn't in the clear yet," said Arthur Hayes, CIO of Maelstrom, noting that despite the rally to $74,000, the correlation with the IGV ETF remained. Whether Thursday's decoupling will last remains to be seen, but software names pushing higher while bitcoin retreating is not what crypto bulls wanted to see. "It could be a dead cat bounce," Hayes continued.

Traders today might also be taking some chips off the table ahead of Friday's key U.S. jobs report for February. The economic data of late has mostly surprised to the upside, pushing down odds for a restart of Federal Reserve rate cuts.

Interest rate traders at the Chicago Mercantile Exchange now see an 88% chance that the Fed will keep rates steady not only at this month's meeting but in April as well. A month ago, those odds were at 59%.

"We're cautiously constructive, but the geopolitical tail risk demands humility," said Bryan Tan, trader at Wintermute. He said improving flows into spot bitcoin exchange-traded funds (ETFs), which have recorded nearly $2 billion in inflows in the past week alone, alongside stabilizing trading volumes, are supporting the market, while muted reaction to disruptions around the Strait of Hormuz could leave room for bitcoin to climb toward the $74,000-$75,000 range.

Bitfinex analysts said there's been a "notable increase in spot market strength," indicating the recent move higher was driven by market buyers rather than speculative leverage.

"We consider there to be a possibility of relief over the coming weeks and months should this trend follow through," they added.