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.

Russell 2000 Hits Records While Bitcoin Lags

For the first time in five years, the Russell 2000 Index (IWM) is hitting record highs, yet Bitcoin (BTC $90,258) remains roughly 27% below its October peak, breaking its usual historical alignment with small-cap equities. Historically, new highs in the Russell 2000 have often coincided with Bitcoin surges—most notably in November 2021 when BTC peaked at $69,000, in early November 2024 above $90,000, and in mid-October when it surged to $126,000. Both bottomed on Nov. 21.

The Russell 2000, a gauge of U.S. small-cap stocks, reached a record Thursday, alongside larger-cap indices such as the Dow Jones Industrial Average and the S&P 500. The Nasdaq 100 is just shy of its all-time high, while metals, led by silver, are also reaching peak levels.

Small-Cap Sensitivity and Fed Rate Cuts

Smaller, more volatile companies are generally more sensitive to interest rate changes than large-cap stocks, a factor that has taken on added importance following the Fed’s 25-basis-point cut on Wednesday. Expectations for 2026 Russell 2000 earnings-per-share growth are exceptionally strong, around 49%, according to Goldman Sachs.

The market has already priced in another 50 basis points of potential rate cuts over the next 12 months, according to the CME Fed Watch Tool, which could provide additional support for risk assets, including cryptocurrencies.

Treasury Bill Purchases and Liquidity

Later Friday, the Fed will kick off its Treasury bill purchase program with $8.2 billion, part of a broader $40 billion plan running from Dec. 12, alongside reinvestments of maturing agency securities. This renewed liquidity injection is expected to bolster money markets and risk assets across equities and crypto.

With small-cap stocks surging and monetary support returning, analysts suggest Bitcoin and other cryptocurrencies may be poised to catch up, closing the gap with record-setting U.S. equities.