Monday’s market turmoil, triggered by new artificial intelligence model DeepSeek, highlighted a key divergence between Bitcoin and traditional stocks, with the former showing remarkable resilience compared to large-cap tech stocks. Analysts say this behavior underscores BTC’s growing potential as a portfolio diversifier during periods of market volatility. “The DeepSeek-driven decline certainly tested the correlation that Bitcoin tends to exhibit against large-cap tech stocks and broader risk assets,” said Gordon Grant, a crypto derivatives trader. “Bitcoin’s strong recovery and the narrative that has developed around it suggest a meaningful divergence from traditional claims of an AI-powered future.” The volatility in the market has reignited debate over whether Bitcoin’s long-standing correlation with the Nasdaq is weakening. “This week could test whether BTC’s correlation with equities is weakening, especially as a favorable regulatory environment offers potential support,” analysts at QCP Capital wrote. Related News: Bernstein Analysts Share Bitcoin Price Predictions and Investor Trends for 2025! Here Are the Details Bitcoin’s steadiness late Monday added to the divergence narrative, even as Nasdaq futures continued to fall during U.S. trading hours. “Bitcoin had a limited decline and some divergence was already evident,” said André Dragosch, head of research at Bitwise Europe, adding that Bitcoin’s price declines were quickly bought up, indicating growing investor confidence. “History shows that a short-term decline for Bitcoin often precedes a long-term rally,” Dragosch continued. “This resilience, combined with investor behavior, makes the asset increasingly attractive as a diversifier.” The derivatives market also reflected this sentiment, with implied volatility quickly normalizing after the initial panic. Grant observed that Bitcoin has reclaimed the upper end of its price range since late November, a sign that investors are refocusing on key technical levels. As bitcoin’s market cap increases, it is attracting interest from a wider range of investors. This shift is reflected in the increasing trading volumes of bitcoin exchange-traded funds (ETFs), strengthening the case for its inclusion in diversified portfolios. However, Grant warned that integrating bitcoin into broader portfolios could pose risks during market-wide sell-offs. “As Bitcoin becomes a more prominent portfolio component, it could face a ‘co-ownership problem’ where panic selling affects all assets simultaneously,” he warned. *This is not investment advice. Continue Reading: What Does Bitcoin’s Rapid Recovery After the DeepSeek Earthquake Really Tell Us? Analysts Assessed