The Trump administration’s embrace of cryptocurrencies is helping fuel a speculative mania that could cause “havoc” when prices collapse, hedge fund Elliott has warned.

The $70bn-in-assets firm took aim at the US government’s apparent enthusiasm for assets that have soared in price but have “no substance”, and also at politicians who are supportive of cryptocurrencies that could eventually become a rival to the US dollar, according to an investor letter seen by the Financial Times.

The fund “has never seen a market like this”, wrote Elliott, referring to the speculative investor frenzy it believes is currently gripping financial markets. It pointed to the artificial intelligence boom and high equity market valuations as signs of investors “acting like a crowd of sports bettors”.