Author: BitpushNews Mary Liu

The well-known hedge fund Elliott warns that the White House is "inflating the cryptocurrency bubble," which could cause "serious damage."

Elliott has been described by Fortune magazine as "the world's most famous and feared activist investor."

According to a recent investor letter obtained by the Financial Times, Elliott Management warns that the Trump administration's support for cryptocurrencies is fueling speculative frenzy, which could lead to "serious damage" once cryptocurrency prices plummet.

This institution, which manages $700 billion in assets, publicly criticizes the U.S. government—condemning its blind enthusiasm for "price surges without substantial support" assets and accusing some politicians of supporting cryptocurrencies that could undermine the dollar's hegemony.

Cryptocurrency: "The Core of the Bubble" and Its Connection to the White House

Elliott Management stated that the fund has "never seen a market like this," believing that the frenzy of speculative investors is sweeping through the financial markets. It pointed out that the boom in artificial intelligence and the overvaluation of the stock market are signs of "investor behavior akin to gamblers betting on sports events."

The report further added that "cryptocurrencies are the epicenter of the market's speculative frenzy," not only because their market value continues to swell but also due to their "perceived close relationship with the White House."

The report claims that the cryptocurrency bubble "will inevitably burst" and "could cause serious damage in ways we cannot predict."

This criticism is quite ironic—Elliott's founder, Paul Singer, has long been a major donor to the Republican Party, with his fund donating $56 million to conservative candidates during the 2024 election cycle (data source: OpenSecrets) and contributing $5 million to the "Make America Great Again" political action committee supporting Trump's re-election in 2024.

Since Trump's election last November, the crypto market has soared, following his promise to make the U.S. a "global Bitcoin superpower." Bitcoin's price surged from around $70,000 before the election to over $100,000 at its historical peak.

Bitpush previously reported that after taking office, Trump signed an executive order to promote America's "leadership in digital assets and fintech while protecting economic freedom," and tasked a working group to assess the establishment of a national digital asset reserve.

Policy Paradox: Undermining Dollar Hegemony?

Elliott's letter sharply pointed out that while many countries are trying to reduce their dependence on the dollar, the U.S. government is encouraging the development of alternatives that could threaten the dollar's status as the reserve currency, "this policy contradiction is perplexing."

Elliott emphasized that any official supporting actions that "marginalize the dollar" is "extremely dangerous," and exposed the current situation where "hundreds of millions of dollars have flowed to pro-cryptocurrency policy candidates" in past election cycles.

For example, the Fairshake political action committee, aimed at promoting the election of bipartisan crypto-friendly candidates, has 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 issued Meme coins without any substantial business model support. Trump Media announced on Wednesday that it would invest $250 million in the cryptocurrency asset sector.

Founded in 1977, Elliott is known for its activist investment style, having forced several publicly traded companies and sovereign nations to make concessions through shareholder lawsuits and boardroom battles. Its classic "achievements" include pressuring Starbucks to change its CEO and initiating a "proxy fight" at Southwest Airlines, leading the airline's chairman Gary Kelly to announce his retirement, while Elliott secured five board seats. According to Forbes, as of March 2024, Elliott's founder Paul Singer has an estimated net worth of $6.1 billion.

Elliott Management's stern warning about the cryptocurrency market not only reveals its keen sense of market risk as an "activist investor" but also highlights the deep contradictions within the global financial system amid the digitalization wave. On one hand, the rise of cryptocurrencies is seen as a potential challenge to dollar hegemony; on the other hand, the ambiguous attitude of the U.S. government and politicians injects significant policy uncertainty into this market.

Elliott's criticism stands in stark contrast to its founder Paul Singer's Republican background, and this contradiction precisely reflects the complex role of cryptocurrencies in the political and capital games. Whether it is Trump's business layout or the massive lobbying of the Fairshake political action committee, it indicates that cryptocurrencies are no longer merely a product of technological innovation but have become a new battleground intertwined with power and interests.

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