Elliott Management Warns: Crypto Bubble Fueled by White House

Elliott Management, a $70 billion hedge fund, has issued a stark warning to the White House, cautioning that its pro-crypto stance is fueling an unsustainable market bubble that could lead to severe financial disruption when it collapses. The hedge fund, founded by billionaire Paul Singer, has a history of political connections and has contributed significantly to conservative candidates in recent election cycles.

In a letter to investors, Elliott Management expressed concern that the speculative mania surrounding digital assets, amplified by political support, represents a looming financial risk with unpredictable consequences. The firm criticized the US government's increasing alignment with cryptocurrencies, arguing that such assets lack fundamental value yet have surged due to perceived proximity to the White House.

Elliott Management warned that embracing digital assets that could marginalize the US dollar is a dangerous policy direction. The firm pointed to the AI-driven stock rally and soaring cryptocurrency prices as evidence that investors are behaving irrationally, with crypto being described as assets with "no substance."

The hedge fund believes that the crypto industry has grown to dangerous levels due to White House endorsement. Elliott's criticism is notable given Singer's political connections and his firm's history of engaging with the Trump administration. Despite being a longtime Republican donor, Singer has frequently voiced skepticism about cryptocurrencies.

Beyond policymaking, Trump's personal and business dealings have deepened his ties to the crypto sector. Alongside his sons and business associates, Trump backed World Liberty Financial (WLFI), a cryptocurrency platform launched last year. He and the First Lady have also introduced meme coins, TRUMP and MELANIA, respectively, presenting a speculative class of cryptocurrencies with no inherent value. Similarly, Trump Media, where the former president holds a majority stake, also announced plans to invest up to $250 million in crypto. These actions, Elliott warns, have further legitimized speculative behavior in the market.

Pro-crypto lobbying has surged, with the Fairshake PAC spending $173 million in the 2023-2024 election cycle to support crypto-friendly candidates. The advocacy group has a $116 million war chest for the 2026 midterms.