As the cryptocurrency market recovers from a steep pullback, Ethereum is rising out of a sea of red to hit all-time highs.

The second-largest crypto has risen 11% on the week to hit $1,480, as Bitcoin has moved in the opposite direction. This follows suggestions from incoming treasury secretary Janet Yellen that lawmakers “curtail” cryptocurrency use, and claims that a “critical flaw” had been discovered in the Bitcoin blockchain.

Biden’s inauguration week breaks records

• Both the S&P 500 and NASDAQ100 reached new highs last week, as Joe Biden officially took office.
• The jump of 14% in US markets from Biden’s election to inauguration is a record, beating the previous 8.8% shared by JFK and Clinton’s 2nd term.
• Markets are riding high on expectation of stimulus, vaccine rollout and some good corporate earnings.
• New Treasury Secretary Janet Yellen has always been dovish, and her call to “go big” on stimulus is continuing to fuel the Wall Street rally.

As Bitcoin takes a breather and prices linger around $35K, the cryptocurrency market is staying in the global spotlight.

Last week, Twitter CEO Jack Dorsey championed Bitcoin in a tweet explaining Trump’s Twitter ban, shortly before institutional investment fund Grayscale reported a record day of fundraising, and the mayor of Miami moved one step closer to adding crypto to the city’s treasury.

Wall Street closes lower despite stimulus

• The DJ30, SPX500 and NASDAQ100 all closed lower on Friday and finished the week at overall losses.
• There is still a level of uncertainty in the markets, as investors wait to get a better understanding of life under Biden.
• On Thursday, the President-elect announced a $1.9 trillion stimulus package, which includes aid to the unemployed ($400 per person), to families ($1,400) and $350 billion in aid to states.
• Biden is also proposing to raise the federal minimum wage to $15 an hour.
• A reason for this having no effect on markets could be that this stimulus was already priced, with stock indices reaching all-time highs in anticipation of the aid package. …

As protestors stormed Capitol Hill last Wednesday, Bitcoin broke through $40K, pushing the total crypto market cap beyond the $1 trillion threshold.

The Democrat’s narrow victory over the senate fuelled the Bitcoin rocket further, creating expectations that a unified government legislature will pave the way for fiscal stimulus worth up to $3 trillion.

This pushed the crypto market rally into overdrive. Stellar doubled before finishing the week with 50% gains, XRP shrugged off the SEC lawsuit to rebound 17%, and Ethereum approached all-time highs before Bitcoin put an end to the fun by tumbling all the way back to $33K.

Wall Street climbs despite Washington chaos

• Unprecedented images were seen in Washington D.C. last week, as a group of Trump supporters stormed the Capitol Building.
• Although a brief dip occurred during the mayhem, this was overshadowed by the Democratic clean sweep in Senate elections, which is seen as a catalyst for more stimulus.
• On average, when the Democrats control the Presidency and both chambers, the S&P 500 returns around 9% on average over the course of the following year.
• Looking at the past year, The S&P’s 2020 reversal off the lows (-35%) has been the greatest ever, with a +16% return last year. …

While traditional markets were sleeping, Bitcoin welcomed the new year with a record-breaking rally. The leading crypto hit a series of fresh highs, tagging prices just below $35K on the twelfth anniversary of the first block mining.

The soaring prices appear to be driven by institutional buying. $1.2 billion worth of Bitcoin was discovered flowing out of Coinbase late last week, suggesting deep-pocketed traders have been buying for long-term investment.

It’s beginning to look a lot like Christmas in the crypto market, as traders are gifted with fresh Bitcoin all-time highs after a turbulent year.

The leading crypto smashed through the record of $20K on Wednesday, exactly three years since the last all-time high in 2017. Then it sprinted into uncharted territory to hit new records above $24K. Yet 2020 has seen Bitcoin jump more than 230%, more than any other asset class. Why did this happen, and what could we expect to see from Bitcoin in 2021?