Suspected “1011 Insider Whale” analyst Garrett Jin stated that U.S. stocks’ Nasdaq remains sideways, while the Russell 2000 hits new highs and drives increased trading volume in Bitcoin and Ethereum, indicating that capital is rotating from large tech stocks into high Beta assets.
(Previous update: JPMorgan: Crypto market sell-off nearing end, Bitcoin shows signs of bottoming out)
(Additional background: Florida reboots “Strategic Cryptocurrency Reserve” proposal! Plans to use 10% of state public funds to buy Bitcoin)

Table of Contents

• The background of small-cap leading
• Returning to risk appetite
• Bitcoin leads, Ethereum follows

Today (12), suspected “1011 Insider Whale” analyst Garrett Jin posted on X that the performance of the Nasdaq 100 index lagged, while the Russell 2000 continued to hit new highs. Capital has clearly rotated into mid and small-cap stocks, indicating that market risk appetite is expanding. As high Beta risk assets, Bitcoin (BTC) and Ethereum (ETH) are expected to be the next to attract inflows.

Nasdaq 100 is lagging while Russell 2000 continues making new highs.
Clear rotation into mid and small caps suggests risk appetite is expanding.
BTC and ETH, as high-beta risk assets, are next in line to absorb inflows.

— Garrett (@GarrettBullish) January 12, 2026

The background of small-cap leading

Over the past four weeks, approximately $18 billion has been withdrawn from large-cap tech ETFs and flowed into Russell 2000 components with valuations below 20 times earnings. Research firms point out that the Trump administration will continue deregulating industries in the second term, while the Federal Reserve has lowered the federal funds rate to 3.5%, significantly reducing financing costs for small companies with high debt ratios, directly boosting earnings expectations.

Meanwhile, differences in cash reserves among companies have led to varied sector reactions. Large tech companies with ample cash are less sensitive to rate cuts; highly leveraged small companies can immediately benefit from lower financial expenses. The market thus tends to seek excess returns in undervalued, policy-sensitive sectors.

Returning to risk appetite

Garrett Jin pointed out that buying small-cap stocks and betting on crypto assets are essentially high-volatility strategies. If Wall Street is willing to re-engage with small-cap risk, it indicates a loose liquidity environment, and subsequent capital may flow along the same logic into higher Beta Bitcoin and Ethereum.

Supporting evidence has also appeared in ETF statistics. As of the week ending January 10, North American crypto spot and futures ETFs recorded a combined net inflow of about $460 million, marking the third consecutive week of positive flow.

Bitcoin leads, Ethereum follows

Based on historical experience, the sequence of capital entering the crypto market usually starts with the most liquid Bitcoin, then gradually spreads to the second-largest market cap Ethereum, and finally to other tokens.

Recent on-chain data shows that after net outflows from exchanges turned negative in the third week of December 2025, they have turned positive again, with daily trading volume rising to about $12 billion in the first week of January.

Before structural advantages change, Bitcoin remains the preferred choice for institutions testing risk tolerance. However, it is worth noting that the ETH/BTC exchange rate stopped falling after reaching a relative low of 0.055 at the end of December.