- The US$70 billion Elliott hedge fund has issued stark warnings about the cryptocurrency market’s speculative nature, particularly following Trump’s involvement and the rise of presidential memecoins.
- Fund managers and industry experts express concern about the reputational risks of memecoin ETFs, with one executive suggesting they belong in casinos rather than stock markets.
- Elliott founder Paul Singer, who previously predicted the 2008 financial crisis, dismissed cryptocurrencies as marketable nothingness despite agreeing with critiques of central banking.
Ever since Donald Trump gave a speech at the 2024 Bitcoin conference where he promised to fire Gary Gensler “on day one” and establish a Strategic Bitcoin Reserve he’s been the darling of the crypto industry.
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The crypto market rallied following his election in November, and the BTC price went from around US$70k (approx. AU ($9.91)$112k) to as high as US$109,114 (approx. AU$175k) on January 20.
“Never Seen a Market Like This”
But according to one hedge fund it’s a “speculative mania” that could cause a bursting bubble. US$70 billion (AU$112.6 billion) firm Elliott warned in the Financial Times that crypto has “no substance”, and took a swipe at the Trump admin’s involvement with the asset class.
In a note seen by the FT ($0.26), Elliott wrote they had “never seen a market like this”, adding that the market is filled with a speculative frenzy similar to that of sports betting, fuelled by the AI boom and high stock valuations.
The firm highlighted that crypto, significantly expanded and seemingly close to White House policies, is the epicentre of this market speculation. Additionally, Elliott warned that the potential bursting of the crypto bubble could cause unforeseeable and widespread disruption.
The comments come after Trump released a memecoin with his own name in it and is allegedly making large profits from its sale.
There are also fund issuers that want to launch exchange-traded products (ETPs) or even exchange-traded funds (ETFs) featuring the president’s memecoin (and others), which has drawn widespread criticism.
Welcome to The Memecoin Market The Casino
Nate Geraci of the ETF Store acknowledged that “the vast majority of memecoins trends towards zero”, adding that it creates a “dilemma for issuers”, as it could carry enormous reputational risks.
The optics of offering memecoin ETFs could be detrimental to a firm that wishes to be taken seriously by Wall Street.
Nate Geraci Morningstar executive Bryan Armour compared memecoin ETFs to a thing that belongs in a “casino [rather] than in a stock market”.
Paul Singer, the founder of Elliott, one of the world’s most successful hedge funds, had warned of the 2008 financial crisis and tried to alert about the threat of subprime mortgages.
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In 2023 he criticised the rise of crypto, telling the Wall Street Journal that they’re an expression of libertarian views and scepticism towards central bank fiat money.
Despite agreeing with the critique of central banking, Singer argued that cryptocurrencies hold no real value and are not viable alternatives to traditional assets like gold, bluntly stating:
There are thousands of cryptocurrencies. That’s why they’re worth zero. Anybody can make one. All they are is nothing with a marketing pitch—literally nothing.
Paul Singer The post Hedge Fund Warns: Trump Administration’s Crypto Enthusiasm May Lead to Market Havoc appeared first on Crypto News Australia.
