The Federal Reserve will kick off 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-Caps Surge, Bitcoin Trails
For the first time in five years, the Russell 2000 Index (IWM) hit record highs, while Bitcoin (BTC $90,258) remains roughly 27% below its October peak, breaking its typical alignment with small-cap equities. Historically, Bitcoin rallies have coincided with Russell 2000 highs—seen in November 2021 at $69,000, early November 2024 above $90,000, and mid-October at $126,000. Both bottomed on Nov. 21.
Larger benchmarks, including the Dow Jones Industrial Average and S&P 500, also reached record levels, while the Nasdaq 100 trades just below its all-time high. Precious metals, led by silver, are hitting new peaks as well.
Rate Cuts and Risk Appetite
Smaller, more volatile companies tend to be more sensitive to interest-rate changes, a factor highlighted by the Fed’s 25-basis-point cut on Wednesday. Goldman Sachs forecasts 2026 Russell 2000 earnings-per-share growth of roughly 49%. Markets have also priced in an additional 50 basis points of rate cuts over the next 12 months, potentially supporting risk assets, including cryptocurrencies.
Treasury Bill Purchases Begin
The Fed’s Treasury bill program starts Friday with $8.2 billion, part of a broader $40 billion plan beginning Dec. 12, alongside reinvestments of maturing agency securities. This renewed liquidity is expected to bolster money markets and provide support for 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.
