Elliott Management, the activist investment firm led by Paul Singer, has expressed concerns regarding the cryptocurrency market, suggesting that it may be on the edge of an “inevitable collapse.”
In a recent investor letter informed by Fortune, the firm attributed the inflation of this so -called “cryptographic bubble” to the perceived support of the White House, particularly during the administration of President Donald Trump.
The imminent collapse of cryptography ahead?
He letter Articulated issues that the support of the cryptocurrencies of the US government could undermine the position of the dollar as the world’s main reserve currency.
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Elliott Management stressed that the dramatic increase in cryptography prices, supposedly linked to Trump promotion of digital assets, raises risks not only for individual investors but also for the economy in general.
The firm warned that the imminent collapse of the supposed cryptographic bubble could have unforeseen repercussions, potentially destabilizing financial markets.
Elliott’s letter indicated what they call “speculative nature” of the current cryptography market, where an increase in investment seems to be promoted more by exaggeration than by intrinsic value. The firm said that “I had never seen a market like this”, where investors are attracted to assets, particularly Memecoinsthat lack substantial support.
They affirm that this “speculative fervor”, compared to the behavior of sports stationers, has attracted a wave of new investors with the hope of continuous price increases without a solid base.
The concerns are mounted on the future of the US dollar
Elliott expressed a particular concern for Trump’s vocal support during his campaign and his participation in several companies related to cryptography has contributed to a perception of legitimacy surrounding the sector.
Trump and their children have increasingly jumped to Digital Assets Sector With companies such as World Liberty Financial (WLFI), American Bitcoin (ABTC) and the launch of the president’s official memecoin, Trump, which has caused considerable criticism among the Democrats.
Elliott warned that such endorsy could marginalize the dollar, which the company described as “deeply dangerous.” The establishment of a national reserve for digital assets, as proposed by the Trump administration, further complicates this scenario, which potentially dilutes the influence of the dollar on the global economy.
The letter also emphasized the need for caution among investors, warning that many are betting on a volatile market based on “speculative trends instead of solid financial principles.”
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Despite the crude warning of the company, cryptocurrency prices recovered on Wednesday. The leading cryptocurrency, Bitcoin (BTC), quoted at $ 113,450 when writing, after consolidating for days between $ 110,000 and $ 112,000.
In addition, the recent approval of the Genius Law, the first cryptographic law signed by President Trump, is expected to improve the use of the US dollar as a complement to Stablecoinsthus updating the broader financial system.
Wall Street Morgan Stanley, Citi, Bank of America and JPMorgan Chase have also expressed their willingness to enter the sector. This highlights the progress of administration in the development of a new framework that could mitigate the risks while accelerating the adoption of digital assets.
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