A sell-off triggered by China’s new AI model, DeepSeek, has highlighted the differing reactions of Bitcoin and traditional stocks to market volatility, according to The Block.
High-risk assets experienced significant declines, while the leading cryptocurrency quickly rebounded. This trend underscores the growing potential of digital gold as a portfolio diversifier.
“The sell-off triggered by DeepSeek certainly tested the correlation that Bitcoin typically shows with tech giants’ stocks and risk assets more broadly,” said crypto derivatives trader Gordon Grant.
According to him, the strong rebound of the cryptocurrency highlights a shift in narratives towards “healthy differentiation,” where the digital asset “stands out significantly” and has little in common with the overall AI bet.
“This week could test Bitcoin’s correlation with stocks, especially considering the potential support from a favorable regulatory environment,” analysts at QCP Capital believe.
Head of Research at Bitwise in Europe, Andre Dragos, also noted that cryptocurrency prices stabilized within a day. Meanwhile, Nasdaq futures continued to decline until the end of the trading session.
“This indicates that Bitcoin has limited downside potential, and some decoupling is already observed,” the expert believes.
He noted that risks in the leading cryptocurrency appear “more moderate,” and sharp price drops lead to increased buying.
“People often worry about correlations when the [stock] market fails, and crypto assets follow suit. However, history shows that in the case of Bitcoin, a short-term decline often leads to a long-term rise,” Dragos emphasized.
In February, the price of digital gold could reach $122,000 before “another consolidation,” experts at 10x Research suggested.