Bitcoin and crypto prices have rocketed higher since Donald Trump’s U.S. presidential election victory—helped by Tesla billionaire Elon Musk’s leaked plans for crypto in the White House.
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The bitcoin price has surged to over $100,000, more than doubling from 12 months ago and fueling huge bets on when exactly the bitcoin price could top gold’s $18 trillion market capitalization.
Now, as a closely-watched trader warns of a looming “financial crisis,” a leaked Elliott Management letter to investors reveals the hedge fund’s managers fear Trump is stoking an unprecedented bitcoin price bubble that’s headed for “inevitable collapse.”
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U.S. president Donald Trump has described himself as the first “crypto president”—pushing the … [+]
Elliott Management, one of the world’s largest activist funds, has warned the “inevitable collapse” of the crypto bubble “could wreak havoc in ways we cannot yet anticipate” in an investor letter seen by the Financial Times that criticizes politicians who are supportive of cryptocurrencies that could eventually become rivals to the U.S. dollar.
“Crypto is ground zero,” according to the letter, in part due to bitcoin and crypto’s “perceived proximity to the White House” following the election of Trump, his new-found support for bitcoin and crypto and his inner circle that’s enamored with the technology.
Last week, Trump followed through on his campaign promises to make overhauling crypto policy one of his administration’s priorities, ordering the creation of a cryptocurrency working group tasked with proposing new regulations and exploring the creation of a national cryptocurrency stockpile.
Trump’s crypto and artificial intelligence czar, venture capitalist David Sacks, will chair the group, with Sacks—an early investor in the ethereum rival solana—telling Fox Business that Trump’s actions showed he is following through on his promise to make the U.S. the “crypto capital” of the world, something Trump also told World Economic Forum attendees in Davos.
In July, then Republican candidate Donald Trump promised to create a “strategic national bitcoin reserve” and predicted bitcoin could eclipse gold’s $16 trillion market capitalization during an appearance at the Bitcoin 2024 conference.
On the weekend before his inauguration, Trump launched memecoin, followed closely by his wife Melania launching one of her own, both of which surged to multi-billion dollar valuations before crashing back.
Elliot fund managers have “never seen a market like this,” they wrote, referring to the speculative investor frenzy gripping financial markets and adding the artificial intelligence boom and high equity market valuations are signs of investors “acting like a crowd of sports bettors.”
The letter also warned U.S. officials that support “marginalizing the dollar” are “profoundly dangerous” and could rob the U.S. of its “immense advantage” derived from the dollar’s position as the world’s reserve currency.
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The bitcoin price has shot to an all-time high of almost $110,000 per bitcoin in the aftermath of … [+]
Muddying the waters, the FT pointed to Elliott founder Paul Singer’s support for the Republican Party and his donation of $56 million to conservative candidates in the 2024 election cycle, including a $5 million gift to the “Make America Great Again” Trump-supporting political action committee.
In an interview with Grant Williams earlier this month, Singer pointed to the explosive growth in crypto assets as a prime example of irrational investor activity. “People try to be rational and think that they’re rational, but quite frequently they’re not,” Singer said. “And there is hardly a better example today than cryptocurrencies.”
In 2023, Singer told the Wall Street Journal that bitcoin and cryptocurrencies are “completely lacking in any value”—with the bitcoin price at under $30,000 at the time.
“There are thousands of cryptocurrencies,” Singer told the Journal. “That’s why they’re worth zero. Anybody can make one. All they are is nothing with a marketing pitch—literally nothing.”
