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From Lockstep to Lag, Bitcoin Poised to Catc
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From Lockstep to Lag, Bitcoin Poised to Catc
From Lockstep to Lag, Bitcoin Poised to Catch Up With Small Cap Highs
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From Lockstep to Lag, Bitcoin Poised to Catch Up With Small Cap Highs
The Federal Reserve begins Treasury bill purchases later Friday, starting with $8.2 billion as part of its reserve management program.
By James Van Straten|Edited by Sheldon Reback
Dec 12, 2025, 10:50 a.m.
Russell 2000 (TradingView)
What to know:
- The Russell 2000 index has pushed to new all time highs alongside strength across U.S. equities and metals, while bitcoin remains 27% below its peak, marking a rare divergence after years of moving in sync.
- With small-cap stocks highly sensitive to falling interest rates and 2026 earning-per-share growth expectations near 49%, according to Goldman Sachs, improving macroeconomic conditions could realign bitcoin and crypto with small-cap strength.
- The Federal Reserve starts Treasury bill purchases today with an initial $8.2 billion operation, the first step in a $40 billion reserve management program running until April.
For the first time in five years, the Russell 2000 Index (IWM) is hitting record highs while bitcoin BTC$92,441.66, which usually tops in tandem, is out of sync and remains 27% below October's record. History suggests the largest cryptocurrency and cryptocurrencies more broadly are likely to catch up.
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.
STORY CONTINUES BELOW
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Since 2020, new highs in the Russell 2000 have typically coincided with new highs in bitcoin BTC$92,441.66. This alignment was evident in November 2021, when bitcoin peaked at $69,000. It appeared again in early November 2024, when bitcoin moved above $90,000, and again in mid October when it surged to $126,000. Both bottomed on Nov. 21.
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.
EPS for Stock Indices (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.
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Bitcoin remains trapped in a range despite the U.S. rate cut, while altcoins and memecoins struggle to attract risk appetite amid shifting investor behavior.
What to know:
- BTC briefly dipped below $90,000 after Wednesday's 25 basis-point U.S. rate cut before rebounding, but price action lacked a clear fundamental catalyst.
- Tokens such as JUP, KAS and QNT posted double-digit weekly losses, while CoinMarketCap’s altcoin season index fell to a cycle low of 16/100.
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