Elliot Management, a well-known hedge fund led by Paul Singer, has recently raised a red flag on President Donald Trump’s support of cryptocurrencies according to BSCN. According to the firm, his pro-crypto stance could lead to significant damages in the economy when the crypto bubble collapses.
Elliot Management’s Crypto Stance
Elliot Management has had a negative notion about the crypto industry and has been described as “one of the most brilliant scams in history” in a 2018 letter sent out to the clients. The letter also doubted long term viability of the industry. With the current political situations, the firm currently fears that if the industry keeps on getting such huge support from the government, specially from somebody like Trump, it could lead to increase in investments that are based on speculations rather than based on financial analysis.
Concern Over Governance Support of Cryptocurrencies
According to the management firm, when somebody so influential like President endorses and supports cryptocurrency, people may think that it is a good investment because President Trump is backing it, and will end up investing a huge amount into the market. This will cause the prices of the tokens to go up and create a bubble and if the bubble bursts, many people could suffer huge losses and might potentially destabilize financial markets and affect investors globally.
Dollar Dominance
The firm also questions why the US government would encourage alternatives to the dollar, given its immense advantage as the world’s reserve currency. The firm pointed out that such backing by the politicians could erode the dollar’s dominance and disrupt financial stability.
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