According to @KobeissiLetter, only 25 percent of S&P 500 industry groups are trading above their 10-week moving average, the lowest share since the April sell-off, with just 6 of 25 sub-industries still above that level. @KobeissiLetter noted the share has dropped by about 60 percentage points in recent weeks, underscoring a sharp deterioration in participation. @KobeissiLetter also reported that roughly 44 percent of S&P 500 stocks are above their 50-day moving average, one of the lowest readings since April, signaling narrowing breadth. Traders use the percent of stocks above key moving averages to gauge market breadth and confirm or question headline index strength, source StockCharts ChartSchool. Because crypto has shown periods of positive correlation with US equities, crypto traders often monitor equity breadth as a risk sentiment proxy, source International Monetary Fund research on rising crypto–equity correlation.

According to @KobeissiLetter, the number of zombie companies in the Russell 3000 jumped by 83 in October to 639, the highest since December 2021 (source: @KobeissiLetter). According to @KobeissiLetter, zombie firms are those that cannot generate enough profit to cover interest payments and are staying afloat through continued borrowing (source: @KobeissiLetter). According to @KobeissiLetter, many of the new zombies are in health care and biotech, sectors pressured by soaring costs and declining federal support (source: @KobeissiLetter). According to @KobeissiLetter, the recent peak was 749 zombie firms in March 2021, and many small companies are struggling (source: @KobeissiLetter). According to the International Monetary Fund (2022), stock–crypto correlations have increased, implying that stress in small-cap equities and credit can transmit to risk assets like BTC and ETH (source: International Monetary Fund, 2022 analysis on rising crypto–equity correlation). According to the International Monetary Fund (2022) and @KobeissiLetter, the jump in zombie companies underscores cross-asset risk channels that traders should factor into BTC and ETH risk management and liquidity monitoring (source: International Monetary Fund, 2022; @KobeissiLetter).

According to @StockMKTNewz, the Russell 2000 posted its first record high since 2021, highlighting renewed strength in U.S. small caps as reported by CNBC (source: @StockMKTNewz on X citing CNBC). The index is also tracking a seventh straight weekly gain, its longest winning streak since 2020, signaling sustained positive momentum in small caps (source: @StockMKTNewz on X citing CNBC). For traders, new highs plus multi-week momentum can serve as a trend-strength and breadth signal in small caps, a cross-asset risk indicator that crypto participants may monitor for sentiment context (source: @StockMKTNewz on X citing CNBC).

According to @StockMKTNewz, heads of equity trading at Citi and JPMorgan have expressed a bullish outlook for the next few weeks on small caps, technology hardware, and homebuilders, sectors that have recently lagged behind the S&P 500 Index (source: Bloomberg via StockMKTNewz, May 14, 2025). This sector rotation could drive increased volatility and liquidity in related equities, which may impact crypto markets as investors rebalance portfolios and seek higher returns. Traders should monitor capital flows from traditional equities into digital assets, as risk-on sentiment in small caps and tech hardware has historically correlated with bullish momentum in leading cryptocurrencies.

According to The Kobeissi Letter, while Dow, Nasdaq, and S&P 500 futures are posting strong gains, the Russell 2000 index is underperforming and remains in the red. This divergence highlights that small-cap stocks and small businesses are facing significant pressure, particularly as the trade war escalates. The market's reaction suggests traders are rotating out of small caps, anticipating continued headwinds for these equities due to their higher exposure to domestic and trade-sensitive economic factors (source: @KobeissiLetter, April 30, 2025).

According to The Kobeissi Letter, while Dow, Nasdaq, and S&P 500 futures are experiencing significant gains, the Russell 2000 index is trading in the red, highlighting relative weakness in small cap stocks. This divergence is attributed to market concerns that small caps and small businesses are likely to be negatively impacted by the ongoing trade war, making them underperformers compared to large-cap equities (Source: The Kobeissi Letter, April 30, 2025). Traders should monitor Russell 2000 performance closely for potential short opportunities or sector rotation as trade tensions continue to influence market sentiment.

According to The Kobeissi Letter, the Russell 2000 Index has officially entered bear market territory for the first time since 2022, highlighting the significant impact of the ongoing trade war on small-cap stocks. Traders should note this shift as it indicates increased volatility and potential declines in small-cap investments.

According to AltcoinGordon, the upcoming bull run is expected to significantly benefit those who have invested in small cap cryptocurrencies during quieter market phases. This insight highlights the importance of strategic patience and conviction in less popular assets, which are projected to yield substantial returns as market conditions shift. Traders are advised to consider diversifying into smaller market cap coins to capitalize on potential explosive growth during the bull run, as per AltcoinGordon's analysis.