The Federal Reserve is set to begin Treasury bill purchases later Friday, starting with $8.2 billion as part of its reserve management program, injecting fresh liquidity into U.S. money markets.
Small-Cap Stocks Surge While Bitcoin Lags
For the first time in five years, the Russell 2000 Index (IWM) hit record highs, while Bitcoin (BTC $90,258) remains about 27% below its October peak, breaking its typical alignment with small-cap equities. Historically, Bitcoin rallies have coincided with Russell 2000 peaks—seen in November 2021 at $69,000, early November 2024 above $90,000, and mid-October at $126,000, with both bottoming on Nov. 21.
Thursday also saw record highs for larger-cap benchmarks, including the Dow Jones Industrial Average and S&P 500, while the Nasdaq 100 trades just below its all-time high. Precious metals, led by silver, are similarly reaching new peaks.
Rate Cuts Boost Risk Assets
Smaller, more volatile companies are generally more sensitive to interest-rate changes than large-cap stocks, a factor highlighted by the Fed’s 25-basis-point cut on Wednesday. Analysts at Goldman Sachs forecast exceptionally strong 2026 Russell 2000 earnings-per-share growth of around 49%.
Markets are currently pricing in another 50 basis points of potential rate cuts over the next 12 months, according to the CME Fed Watch Tool, which could provide further support for risk assets, including cryptocurrencies.
Treasury Bill Purchases
The Fed’s Treasury bill program kicks off Friday with $8.2 billion, part of a broader $40 billion initiative running from Dec. 12, alongside reinvestments of maturing agency securities. This renewed liquidity is expected to strengthen money markets and support both equities and crypto.
With small-cap stocks surging and monetary support returning, Bitcoin and other cryptocurrencies may be poised to catch up to record-setting U.S. equities.
