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

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The Trump administration’s embracing of cryptocurrencies helps fire speculative mania that could cause “havoc” when prices collapse, the managers of the Elliott hedge fund have warned.

The company noted $ 70bn-in-assets aiming for the apparent enthusiasm of the US government over assets that have risen to the price in the price but have “no substance”, and also to politicians who support cryptocurrencies that may come ultimately an opponent of the US dollar, according to an investor letter seen by the Financial Times.

The fund “has never seen a market like this”, Elliott wrote, referring to the speculative investor frenzy that he believes is a grasp of financial markets. He highlighted the artificial intelligence boom and high equity market prices as signs of investors “acting as a crowd of sports betters”.

“Crypto is zero earth” for the speculative surge across markets, not only because of the size it has grown to but also because of its “perceived proximity to the White House”, he added.

The “inevitable fall” of the crypto bubble could “wreck a mess in ways we cannot predict again”, he said.

Elliott’s criticism of the White House stance on Crypto comes despite the company’s founder, Paul Singer, a long -lasting Republican donor who gave conservative candidates $ 56mn in the 2024 election cycle, according to the OpenSecrets website.

In the past Singer, who has long warned of Crypto’s dangers, has been critical of Donald Trump’s economic policies. However, he gave $ 5mn to the “Make America Great Again” political action committee at the last election, and aimed to support the President.

Cryptocurrency prices have rally hard since Trump’s election in November, after he promised to make the United States “the world’s Bitcoin power”. Bitcoin surged from about $ 70,000 before the record election of more than $ 100,000.

After his inauguration Trump signed an executive order to promote “leadership in US digital assets and financial technology in protecting economic freedom” and tasking a working group to evaluate the creation of a national digital asset stock pile.

Elliott’s letter also highlights the “tremendous advantage” that the dollar enjoys as a world -back currency, and questions why the US government would encourage taking alternatives at a time when other countries are trying to wean themselves off the green.

For any elected officer to support “peripheral of the dollar” was “extremely dangerous”, Elliott wrote, highlighting the hundreds of millions of dollars spent helping politicians who sympathized with crypto for election.

For example, Fairshake’s political action committee, which works to get candidates for crypto on both sides of the political aisle, spent $ 173mn in the 2023-2024 election cycle, according to OpenSecrets.

Trump’s own businesses have extended their links with the cryptocurrency markets. Alongside his long -standing sons and business partners, Trump supported a crypto platform called World Liberty Financial last year, and earlier this month he and the first woman launched Melania Trump Memecoins – a type of cryptocurrency with no basic business model or cash flow.

Trump Media said that where the President owns a majority share, on Wednesday he would expand beyond social media and launch a financial services business that would invest up to $ 250mn in cryptocurrency and other assets.

Elliott, founded by the singer in 1977, is known as a terrible activist investor, who employs companies and even countries in a boarding room or heated legal battles.

Elliott refused to comment.