Elliott Management has warned that the U.S. government’s new support and push for cryptocurrencies is fueling a speculative bubble that could end in financial havoc.
In an investor letter seen by the Financial Times, the $70 billion hedge fund criticized the White House’s pro-crypto stance, arguing that digital assets have “no substance” and could undermine the U.S. dollar’s global dominance.
Elliott attributed the recent crypto rally to perceived political backing rather than fundamental market forces. The firm described crypto as “ground zero” for speculative excess, comparing the market frenzy to sports betting.
The hedge fund also highlighted the “immense advantage” the U.S. dollar holds as the world’s reserve currency. It questioned why the U.S. government would encourage alternative assets when other nations are actively moving away from the dollar. Calling this approach “profoundly dangerous,” Elliott criticized policymakers for supporting competition to the greenback while foreign governments seek to reduce their reliance on it.
Since Donald Trump’s re-election in November 2024, Bitcoin has surged from $70,000 to over $100,000. Analysts largely attribute this rally to Trump’s pledge to make the U.S. a “Bitcoin superpower.” Since taking office on January 20, 2025, Trump has signed an executive order promoting digital assets and financial technology, further fueling investor optimism.
Trump’s involvement in crypto extends beyond policy. His businesses have added crypto assets to their portfolios and invested in related ventures.
Elliott is not alone in predicting Trump’s crypto policies will significantly impact the market. Bitwise CIO Matt Hougan believes Trump’s executive order could disrupt Bitcoin’s traditional four-year cycle. In a January 29 research note, Hougan described the January 23 order as a catalyst for mainstream adoption and said that it would enable banks and Wall Street firms to expand into digital assets. This move, he predicted, could inject trillions into the market and cause downturns during Bitcoin cycles, too.
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