Elliott Management has reportedly cautioned that the Trump administration’s push for pro-crypto policies is fueling a speculative frenzy that could cause “havoc” when prices eventually drop.
On Thursday, the Financial Times reported that the hedge fund criticized the US government for its strong support of digital assets, which have surged in value despite lacking real “substance.” Elliott also took aim at politicians who endorse cryptocurrencies, arguing that these assets could eventually threaten the dominance of the US dollar.
Elliott warned that financial markets are experiencing an unprecedented speculative frenzy, stating it has “never seen a market like this.” The firm compared current investor behavior to a “crowd of sports bettors,” pointing to similarities with the artificial intelligence boom and inflated equity valuations, FT said.
Elliott Sounds Alarm Over Market Risks as Trump’s Pro-Crypto Stance Sparks Rally
Since Donald Trump’s election victory, his administration has taken active steps to support the crypto industry. He has proposed creating a crypto advisory council and establishing a national Bitcoin reserve. Additionally, he appointed pro-crypto figures to key regulatory positions, including nominating Paul Atkins for SEC chair and naming David Sacks as the AI and crypto czar.
These moves signal a clear shift in policy toward embracing cryptocurrencies. In response, Bitcoin and other digital assets have surged in value, with BTC hitting new record highs above $108K. Investors remain optimistic about a more favorable regulatory environment under Trump’s leadership.
The FT further reported that Elliott’s investor letter described crypto as the epicenter of the speculative surge spreading across markets. The firm attributed this to both its growing scale and its “perceived proximity to the White House.”
Additionally, the letter cautioned that the “inevitable collapse” of the crypto bubble could cause unpredictable havoc, with unclear consequences.
Elliott Questions Push to Undermine the US Dollar
The FT highlighted Elliott Management’s criticism of the White House’s crypto policy as particularly significant, given that the firm’s founder, Paul Singer, is a major Republican donor.
According to OpenSecrets, Singer contributed $56m to conservative candidates during the 2024 election cycle.
Elliott Management’s letter stressed the US dollar’s immense advantage as the world’s reserve currency and questioned why the government would promote alternatives while other countries are working to reduce their dependence on it.
The firm argued that any elected official pushing to marginalize the dollar is taking a deeply dangerous stance. It also noted the hundreds of millions of dollars in financial backing that pro-crypto politicians have received during elections.
Trump’s Expanding Crypto Footprint
This growing political embrace of cryptocurrency is evident in Trump’s expanding involvement in the sector. The President, along with his sons Donald Jr., Eric, and Barron, as well as longtime business partners, supported the launch of World Liberty Financial, a crypto platform aimed at advancing decentralized finance (DeFi). They have promoted the project as a way to make finance more accessible, particularly for individuals underserved by traditional banks.
In addition to this initiative, Trump and Melania Trump recently entered the memecoin market, further expanding their involvement in the crypto space.
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