#Russell2000 & #Bitcoin, A Growing Divergence 📊

Over the last three months, the Russell 2000 has continued to grind higher, while Bitcoin has been moving lower. This divergence naturally raises the question: what’s driving such clear decoupling?

📝 Previously, I shared data showing Bitcoin diverging from the Nasdaq – a correlation that was historically very strong. One popular explanation was that the rally was isolated to AI and Big Tech, while the rest of the market lagged. However, the Russell 2000 challenges that narrative. It represents 2,000 small-cap companies, and they are clearly moving higher.

So why is Russell rising?

📍 The main driver is liquidity and expectations of a more accommodative credit environment. Small caps are highly sensitive to financial conditions, and markets are increasingly pricing in easier policy ahead.

Then why isn’t $BTC rising, given that it’s also heavily liquidity- and credit-dependent?

📝 In my view, Bitcoin is currently at the center of a larger debate: what matters more right now – the 4-year halving cycle or global liquidity conditions? The answer largely defines whether your bias for 2026 is bullish or bearish.

📍I believe halving cycles remain a critical structural foundation for Bitcoin. They matter. But liquidity matters almost just as much. Because of that balance, I still view the current environment as a bear market for Bitcoin – but with important context.

💡 Just like the previous bull cycle was constrained by tight liquidity, this bear market will be different as well. Expect local bounces, short-term rallies, and even selective strength in some altcoins. In many ways, this will be the mirror opposite of the underfunded bull market we saw before.

This time, Bitcoin’s bear market is overfunded.