Fervor over the potential end to the Federal Reserve's interest rate hikes has fueled a stunning rally among riskier assets that fell to dismal lows last year, helping bitcoin and tech giants emerge as market leaders anew—even as some experts worry the trend may not last.Key Facts
Buzz around institutional giant BlackRock applying for a bitcoin exchange-traded fund has helped the world's largest cryptocurrency mint its stunning rally, but the risk asset has also benefited from inflation falling to the lowest levels since early 2021, giving investors hope the Fed would pause interest rate hikes and potentially cut rates later this year to avoid a recession.
Even adjusted for risk using the Sharpe Ratio, which divides an investment's return by a measure of volatility, the information technology sector, Nasdaq 100, Russell 1000 Growth Index and bitcoin are still top asset classes—far outperforming the S&P 500, which is up 14% this year after falling nearly 20% in 2022.