Russell 2000 hits a new high, why is Bitcoin falling behind alone? The truth behind the divergence in global markets

The Russell 2000 Index rose 1.2% yesterday to hit a new all-time high, which should be a positive signal. But at the same time, Bitcoin fell from $98,000 back to $91,000, while gold and silver hit new highs, and small-cap stocks in the US stock market rose for 11 consecutive days. The market is showing a rare divergence: traditional assets are celebrating, while cryptocurrencies remain silent. Behind this stark contrast, there are deep signals about global liquidity and market shifts.

Global Asset Rally, Why Is Cryptocurrency Unloved?

A look at recent data reveals how absurd this divergence is. In 2025, gold surged over 60%, silver skyrocketed 210%, and the Russell 2000 outperformed the S&P 500 for 11 consecutive days. Entering 2026, this momentum continues, with gold and silver hitting new highs on January 20, and the ChiNext 50 in China’s A-shares rising over 15% in a single month.

In stark contrast is Bitcoin’s performance. This asset, once highly anticipated, supported by ETFs, Wall Street backing, and national strategic reserves, has been steadily retreating amid this global celebration. Bitcoin lingered near $100,000 for three months, recently posting six consecutive down days, with volatility dropping to historic lows. Some investors even summarized a “ABC secret” (Anything But Crypto)—as long as you avoid cryptocurrencies, you can profit from anything else.

The True Meaning Behind the Russell 2000’s New High

The Russell 2000 index represents US small-cap stocks. Its new high is usually interpreted as a sign of increased market risk appetite. According to Bloomberg data, since 1979, there have been five instances where the Russell 2000 led the S&P 500 by at least 500 basis points in the first month of the year. In four of those years, the outperformance persisted throughout the year; the only exception was 2021 (when the small-cap bubble burst). On average, the Russell 2000 gained 22.6% over the entire year in these five cases.

Based on this logic, the Russell 2000’s new high should indicate improved market liquidity and risk appetite. But the problem is, this improvement has not benefited the crypto market.

Three Reasons Why Bitcoin Is Falling Behind

Liquidity Is Tightening, Not Improving

The Federal Reserve’s quantitative tightening (QT) continues, Japan’s central bank has raised interest rates significantly, and both major sources of global liquidity are “shrinking.” The rise in the Russell 2000 is more due to rotation among traditional assets rather than an actual increase in global liquidity. As an asset that tends to rise with liquidity, Bitcoin naturally struggles in a liquidity-constrained environment.

Bitcoin as a Market Early Warning System

Bitcoin is directly driven by global liquidity and often peaks or bottoms before other risk assets. Its current weakness may not be a failure but a precise “fault warning.” When this leading indicator stalls, the upward momentum of other assets that seem strong may also be nearing exhaustion.

The True State of Risk Appetite

Although the Russell 2000 is rising, this is more about sector rotation (small caps, gold, and other safe-haven + growth mixes) rather than a genuine, broad increase in risk appetite. Market uncertainty about the future remains, and large funds instinctively avoid high-risk assets like Bitcoin.

Hidden Concerns Behind the Surface Prosperity

This market divergence appears to be a victory for small caps, but it actually reflects a more complex reality: global financial markets are searching for new growth drivers. The rise in gold and small caps is partly a “flight” from traditional large tech stocks, not the start of a new bull market.

Bitcoin’s silence exposes an awkward truth: despite unprecedented mainstream endorsement, in the actual liquidity environment, it is still regarded as a high-risk asset, easily sold off when market risk appetite declines.

Summary

The Russell 2000’s new high is indeed noteworthy, but it does not signal overall market prosperity; rather, it reflects capital seeking new growth points. Bitcoin’s lag is more concerning, possibly indicating that the upward momentum in other markets is also nearing exhaustion. Investors need to understand that this divergence is not simply “some make money, some lose,” but a reallocation of assets amid tightening liquidity and shifting risk preferences. The key moving forward is not the rise or fall of any single asset, but the true direction of global liquidity and risk appetite.