Author: BitpushNews Mary Liu
Well-known hedge fund Elliott has warned that the White House is "inflating a cryptocurrency bubble" that could cause "serious damage."
Elliott was once described by Fortune magazine as "the world's most famous and most feared activist investor."
Elliott Management has warned that the Trump administration’s support for cryptocurrencies is fuelling a speculative frenzy and could cause “serious damage” if prices plummet, according to an investor letter obtained by the Financial Times.
The institution, which manages $700 billion in assets, openly criticized the U.S. government, criticizing it for its blind pursuit of assets with "soaring prices but no real support" and accusing some politicians of supporting cryptocurrencies that could shake the dollar's hegemony.
Cryptocurrency: The “core of the bubble” is linked to the White House
Elliott Management wrote that the fund has “never seen a market like this” and that it believes a frenzy among speculative investors is sweeping financial markets. It pointed to the artificial intelligence boom and high stock market valuations as signs that “investors are behaving like gamblers betting on sports events.”
The report added that "cryptocurrency is the ground zero for the market's speculative boom," not only because its market value continues to expand, but also because of its special attribute of "being considered closely linked to the White House."
The report said the cryptocurrency bubble "will inevitably burst" and "could cause severe damage in ways we cannot anticipate."
This criticism is quite ironic - Elliott founder Paul Singer is a long-term Republican donor. His fund has donated $56 million to conservative candidates in the 2024 election cycle (data source: OpenSecrets), and in 2024 he invested $5 million in the "Make America Great Again" political action committee that supports Trump's re-election.
Crypto markets have surged since Trump was elected last November after he pledged to make the United States the "world's bitcoin superpower." The price of bitcoin has soared from around $70,000 before the election to an all-time high of more than $100,000.
Bitpush previously reported that after taking office, Trump signed an executive order to promote the United States' "leadership in digital assets and fintech while protecting economic freedom" and instructed a working group to evaluate the establishment of a national digital asset reserve.
Policy paradox: weakening the dollar hegemony?
Elliott pointed out sharply in the letter that while many countries around the world are trying to reduce their dependence on the US dollar, the US government is encouraging the development of alternatives that may threaten the US dollar's status as a reserve currency. "This policy contradiction is puzzling."
Elliott stressed that any official who supports “marginalizing the dollar” is “extremely dangerous,” and revealed that “hundreds of millions of dollars have flowed to pro-crypto policy candidates” in past election cycles.
For example, the Fairshake Political Action Committee, which aims to promote the election of cross-party crypto-friendly candidates, spent $173 million in the 2023-2024 election cycle (data source: OpenSecrets).
This entanglement of capital and policy is particularly evident in Trump's business landscape: his family supported the cryptocurrency platform World Liberty Financial last year, and this month he and his wife Melania each issued Meme coins without actual business models. Trump Media announced on Wednesday that it would invest $250 million to enter the crypto asset field.
Founded in 1977, Elliot is known for its aggressive investment style. It has forced many listed companies and sovereign countries to make concessions through shareholder lawsuits and board battles. Its classic "achievements" include: pressuring Starbucks to replace its CEO; launching a "proxy battle" for Southwest Airlines, which led to the airline's chairman Gary Kelly announcing his retirement, and Elliott won 5 board seats. According to Forbes, as of March 2024, Elliott founder Paul Singer's net worth is estimated to be US$6.1 billion.
Elliott Management's stern warning to the cryptocurrency market not only reveals its keen sense of market risks as an "aggressive investor", but also highlights the deep contradictions of the global financial system in the wave of digitalization. On the one hand, the rise of cryptocurrency is seen as a potential challenge to the hegemony of the US dollar; on the other hand, the ambiguous attitude of the US government and politicians has injected huge policy uncertainty into this market.
Elliott's criticism is in stark contrast to the Republican background of its founder Paul Singer, a contradiction that precisely reflects the complex role of cryptocurrency in the political and capital game. Whether it is Trump's business layout or the huge lobbying of the Fairshake Political Action Committee, it shows that cryptocurrency is no longer just a product of technological innovation, but has become a new battlefield where power and interests are intertwined.
