Russell 2000 outperforms S&P 500 by 14% in first half of 2025, and crypto miners are a big reason why

Small-cap stocks are having their best run relative to large caps in more than 20 years. The Russell 2000 has beaten the S&P 500 by nearly 14 percentage points in the first six months of 2025, a gap that, if it holds through December, would be the largest since the early 2000s.

What’s driving the gap

Bitcoin surged approximately 85% year-to-date through June, and that rally didn’t just lift spot prices. It sent shockwaves through the small-cap universe, particularly among Bitcoin mining stocks that live inside the Russell 2000.

Bit Digital saw its stock price jump 627% during this period. Marathon Digital Holdings climbed 297%. Cipher Mining posted substantial gains of its own. These companies give traditional equity investors direct exposure to Bitcoin’s price movements without requiring anyone to set up a wallet or navigate on-chain infrastructure.

The crypto connection runs deeper than miners

Small-cap digital assets also rallied sharply during the first half of the year as risk appetite returned to the broader market. Gaming and metaverse tokens were particularly strong during this period.

Crypto-native analysis from earlier in the year highlighted that small-cap crypto assets were outperforming the broader digital asset market. That pattern, where the smallest and most speculative assets lead the charge, is historically a hallmark of early-to-mid-cycle rallies.

Historical data shows small-cap stocks and crypto assets frequently move in tandem, especially during periods of improving economic sentiment or monetary easing, as both are sensitive to shifts in liquidity conditions and investor confidence.

What this means for investors

Bitcoin mining firms have effectively turned the Russell 2000 into a partial proxy for Bitcoin exposure. For institutional investors who can’t or won’t hold Bitcoin directly, small-cap mining stocks offer a familiar vehicle with the same directional characteristics.

Small-cap stocks and crypto assets are both high-beta plays, meaning they tend to fall harder during downturns than their large-cap counterparts. If sentiment shifts, the same correlation that’s been driving outperformance could accelerate losses.

Watch Bitcoin mining stocks as a leading indicator. If Marathon Digital and its peers start rolling over, the small-cap trade, and potentially the broader crypto rally, may be running out of steam.

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