- David Einhorn questioned the rise of meme coins with no intrinsic value in his latest letter.
- “It’s anyone’s guess as to what will happen next, but it feels like it’s going to be wild,” he wrote.
- Einhorn said his firm is short two leveraged bitcoin ETFs, and the trade was a “winner” last quarter.
David Einhorn isn’t sold on the latest bout of crypto mania.
The billionaire founder of Greenlight Capital telegraphed his skepticism in his latest letter to investors, hinting that digital assets are approaching a dangerous level of hype.
“We have reached the ‘Fartcoin’ stage of the market cycle,” Einhorn wrote in his letter on January 21. He was referring to a meme coin of the same name, which underwent a meteoric rise and peaked at a $2.5 billion market cap this month.
The token is up nearly 60% year-to-date and yet. Aside from trading and speculation, fartcoin has no obvious purpose that’s not served elsewhere, Einhorn wrote.
Still, the hype around intrinsically worthless meme coins might just be getting started.
Consider that President Donald Trump announced an official $TRUMP coin late last week, described by its own website solely as an "expression of support" — and not an investment opportunity.
His wife, Melania, quickly followed with her own token launch, and both coins soared spectacularly before an aggressive sell-off days later. Some investors suffered big losses.
"Nothing stops the launch of many more tradable coins," Einhorn wrote, and added: "It's anyone's guess as to what will happen next, but it feels like it's going to be wild."
Einhorn also took aim at some of the bullish predictions that have propelled bitcoin to records.
Bitcoin bulls have entered 2025 eyeing a host of tailwinds that could send the cryptocurrency to fresh highs by year-end. In particular, excitement is high for a strategic bitcoin reserve, which would involve the US government buying and holding the token, presumably to protect against inflation and offset rising national debt.
But Tto Einhorn, a bitcoin reserve is a "dubious" use of taxpayer money, and is unlikely to ever to become a reality. Critics are similarly skeptical about financing the effort, with some citing that the process itself would be inflationary.
"More likely, cooler heads will decide that the government should not borrow another trillion dollars in the bond market to speculate in Bitcoin and that there is, in fact, nothing strategic about doing so," Einhorn wrote.
He's also actively betting against some corners of the market His letter said that Greenlight has opened a short position against two levered ETFs tied to bitcoin's biggest corporate holder, Microstrategy.
The funds — T-Rex 2x Long MSTR Daily Target ETF and the Defiance Daily Target 2X Long MSTR ETF — have grown popular in trying to double the returns of MicroStrategy, a massive bitcoin holder.
But to do so, they have embraced call options on MicroStrategy, a stock that can be incredibly volatile. This makes options trading unsustainably expensive, Einhorn wrote.
"These products are destined to fail. Over time, they are likely to bleed out their capital," he said. "During the quarter, the Partnerships established a new arbitrage position by shorting these ETFs, which we partially offset by owning MSTR. This position was a material winner in the quarter."
Einhorn isn't alone in his doubts about crypto. Other Wall Street heavyweights are similarly unconvinced. Earlier this month, AQR Capital co-founder Cliff Asness said crypto is in a bubble, telling CNBC that it needs to develop use cases beyond "speculation and criminality."
It mirrors criticism made by JPMorgan chief Jamie Dimon, who expressed the same thinking on digital assets.
"You know, bitcoin itself has no intrinsic value. It's used heavily by sex traffickers, money launderers, ransomware," he said in earlier this month.
Greenlight returned 7.2% for investors in 2024, the letter said, compared to a return of 25% for the S&P 500. Einhorn also noted that while 2024 was marked by uncertainty over the presidential election, a new Donald Trump administration brings "more uncertainty than ever."
"We know who the President is, but it's anyone's guess as to what he will do," he wrote, adding that economic policy, tariffs, and Trump's mission to shrink government spending are clouding outlooks.