Hedge Fund Warns Investors Trump Is Inflating a Catastrophic Bubble

Hedge fund Elliott Management recently sent a letter to investors warning them away from crypto. It urged clients to remember that crypto is a speculative market, suggested that the White House has caused a massive bubble to form, and predicted that a huge crash is coming.

The Financial Times saw the letter Elliott sent to investors and detailed its dire warnings. The letter told investors it “has never seen a market like this” and said that people were “acting like a crowd of sports bettors.”

When it comes to the surge in reckless speculation across the markets, Elliot says “crypto is ground zero.” Crypto prices have boomed since Trump took office. Bitcoin and just about everything else are going up. People are minting memecoins left and right, doing rug pulls, and absconding with millions of dollars. People are losing a lot of money, but other people are making a ton of money too.

And one of the big winners is President Trump. He is America’s first “crypto president” and has made billions of dollars on paper by minting a memecoin named after him days before his inauguration. It was a way for people to give Trump money without federal oversight and also, now, a way for people to buy shitty Trump-branded merchandise. It’s made Trump and several other early investors very wealthy. Latecomers will have a harder time seeing returns on their investment.

Trump has also teased making a federal Bitcoin reserve. In the letter, Elliott criticized the president for his moves around crypto and said that any U.S. President devaluing the dollar as the world’s reserve currency was “profoundly dangerous.”

People have been predicting the collapse of cryptocurrency for a long time and the speculative bubble often deflates but it never quite bursts. In 2022 it seemed like crypto was poised to go mainstream and various firms ran ads at the Super Bowl starring big name celebrities. Then FTX collapsed, Sam Bankman-Fried was arrested, and it seemed like the market was finally done for.

But that didn’t happen. Instead, we entered a new wild-west era of memecoins and speculative shitposting. The perceived geniuses and adults in the room were ousted or in prison and all that remained were the die-hard true believers, the blatant grifters, and the marks. These days I read as much about crypto being a safe haven during a stock market collapse as I do about the crypto bubble bursting.

Paul Singer, who runs Elliott, has long been an enemy of crypto. “To tell me that something that’s constructed as a computer program, where you engage in some process of sitting there in front of your computer and after a period of time and the expenditure of a bunch of electricity a message appears on your screen that you have created something, that’s ridiculous. It’s nothing. Gold is not nothing, gold is something, you’ll hurt your teeth if you bite a gold coin,” Singer said in an interview in 2021.

In Elliott’s letter to investors, it warned that crypto was doomed to an “inevitable collapse” that might “wreak havoc in ways we cannot yet anticipate.”