Hedge fund Elliott warns White House is inflating crypto bubble that ‘could wreak havoc’

Elliott Management Warns of Crypto Bubble, Blames Trump’s Support

Hedge fund giant Elliott Management has warned of a speculative frenzy in cryptocurrencies, blaming the Trump administration’s backing of digital assets for inflating an unsustainable market, according to the Financial Times.

In a letter to investors, the $70 billion firm cautioned that government support for crypto could lead to catastrophic consequences when the bubble bursts. Known for its aggressive investing, Elliott dismissed cryptocurrencies as lacking substance and criticized politicians for fueling their rise.

Comparing the current market to a sports betting craze, Elliott called crypto the most extreme example of speculation, partly driven by its “perceived proximity to the White House.”

“Crypto is ground zero for speculative excess,” the firm wrote. “Its inevitable collapse could wreak havoc in ways we cannot yet anticipate.”

Bitcoin has surged from $70,000 to over $100,000 since Trump’s election victory, following his pledge to make the U.S. a “bitcoin superpower.” After taking office, he signed an executive order promoting U.S. leadership in digital assets.

Despite Elliott’s criticism, its founder Paul Singer—a major Republican donor—gave $56 million in the 2024 election cycle, including $5 million to a pro-Trump PAC. The firm also warned that U.S. crypto adoption could weaken the dollar, citing millions spent on lobbying by crypto-backed groups like Fairshake PAC, which poured $173 million into the 2023-2024 elections.

Trump’s crypto ties have deepened, with his backing of World Liberty Financial and the launch of memecoins by both him and First Lady Melania Trump. On Wednesday, Trump Media, where he holds a majority stake, announced plans to invest up to $250 million in digital assets.