For the first time in five years, the Russell 2000 Index has achieved record highs, marking a significant milestone for U.S. small-cap equities. This surge comes as other major stock indices, including the Dow Jones Industrial Average and the S&P 500, have also reached new peaks. The Nasdaq 100 is nearing its all-time high, while precious metals, led by silver, are witnessing notable increases as well.
Amid this positive performance in the stock market, bitcoin, often seen as a bellwether for cryptocurrencies, has diverged from this trend. Currently priced at $90,612.54, bitcoin is approximately 27% lower than its record high reached in October. Historical patterns suggest that as the Russell 2000 attracts more investor interest, bitcoin and other cryptocurrencies typically follow suit. This correlation was prominently displayed in November 2021, when bitcoin peaked at $69,000, and again in early November 2024, when it crossed the $90,000 threshold, along with a notable surge to $126,000 in mid-October.
Market analysts from Milk Road Macro highlight that smaller, riskier companies represented in the Russell 2000 are particularly sensitive to fluctuations in interest rates, especially following the Federal Reserve’s recent decision to lower rates by 25 basis points. Current projections indicate a robust earnings-per-share growth for the Russell 2000 in 2026, estimated at around 49%, according to Goldman Sachs. Additionally, the market is anticipating another 50 basis points of rate cuts over the next year, which could further boost riskier assets, including cryptocurrencies.
In a move to enhance market liquidity, the Federal Reserve is set to initiate its Treasury-bill purchase program. This program, beginning soon with an initial purchase of $8.2 billion, is part of a larger $40 billion Treasury bill buy plan. This strategy, which includes the reinvestment of maturing agency securities, signals an intention to inject renewed liquidity into the money markets, potentially benefiting asset classes that thrive on increased liquidity, such as cryptocurrencies.
