For the first time in five years, the Russell 2000 Index (IWM) is hitting record highs while bitcoin
The Russell 2000, a gauge of U.S. small-cap equities, printed a record on Thursday, as did measures for bigger companies like the Dow Jones Industrial Average (DJIA) and the S&P 500 Index. The Nasdaq 100 is just below its all-time high and metals, led by silver, are also hitting peaks.
Since 2020, new highs in the Russell 2000 have typically coincided with new highs in bitcoin
Milk Road Macro noted on X that smaller, more risky companies are more sensitive to interest-rate changes than large megacap stocks. This sensitivity is particularly important following the Federal Reserve’s 25 basis-point reduction on Wednesday. Expectations for 2026 Russell 2000 earnings-per-share growth are exceptionally strong at around 49%, according to Goldman Sachs.
Meantime, another 50 basis points-worth of rate cuts are currently priced into the market for the next 12 months, according to the CME Fed Watch Tool. Those would provide a further boost for riskier assets, like cryptocurrencies.
Fed Starts Treasury Bill Buying
Another source of liquidity is the start of the Fed’s Treasury-bill purchase program. That begins later Friday, according to ZeroHedge, starting with $8.2 billion as part of its reserve management program.
The buying is part of a broader $40 billion Treasury bill purchase plan running from Dec. 12 alongside reinvestment of maturing agency securities, signaling a renewed liquidity injection into money markets.