Analyst Garrett Jin, flagged as a potential insider whale, posted on X that the Nasdaq 100 remains stagnant while the Russell 2000 continues to hit record highs.About $18 billion exited large-cap tech ETFs over the past four weeks, rotating into Russell 2000 components trading below 20x earnings. The shift signals expanding risk appetite, with Bitcoin and Ethereum poised to benefit as high-beta assets.
Small-Cap Rally Fueled by Lower Rates and Deregulation
Research notes that the Trump administration’s second term maintains industry deregulation, while the Fed cut the federal funds rate to 3.5%. Highly leveraged small firms see financing costs drop sharply, boosting earnings expectations. Cash-rich tech giants show limited sensitivity to rate changes, prompting investors to seek excess returns in undervalued, policy-sensitive segments.
Risk-On Flow: From Small Caps to Crypto
Garrett Jin argues that betting on small caps and crypto both reflect a preference for high volatility. The market's willingness to regain small-cap risk suggests ample liquidity, likely channeling funds toward even higher-beta assets like Bitcoin and Ether.For the week ending Jan 10, North American spot and futures crypto ETFs recorded net inflows of approximately $460 million, marking the third consecutive positive week.
Bitcoin Leads, Ethereum Follows
Historically, capital entering crypto first targets the most liquid asset (Bitcoin), then spreads to Ethereum and later altcoins. On-chain data showsBTC exchange net inflows turned positive after a negative spell in mid-Dec 2025, with average daily volume rising to ~$12 billion in the first week of January. Bitcoin remains the primary vehicle for institutions to test risk appetite. Meanwhile,the ETH/BTC ratio stabilized near 0.055 after hitting a low in late December, hinting at a shift toward Ethereum.