Editor's Note: After reviewing the ups and downs of the crypto industry in 2025, let's broaden our perspective: the pulse of global financial markets often mirrors and is inextricably linked to the logic of the crypto sector. This article focuses on 11 key transactions of the year, from cross-market trends to policy-driven asset volatility, revealing market patterns and risk implications that are equally valuable for crypto professionals, allowing us to gain a comprehensive understanding of the year's financial landscape.
This is another year full of "high-certainty bets" and "rapid reversals".
From bond trading desks in Tokyo and credit committees in New York to foreign exchange traders in Istanbul, the markets brought both windfalls and dramatic volatility. Gold prices hit record highs, the stock prices of reputable mortgage giants fluctuated wildly like "meme stocks," and a textbook arbitrage trade collapsed in an instant.
Investors bet heavily on political upheaval, bloated balance sheets, and fragile market narratives, driving a surge in stock markets and a proliferation of yield trades, while cryptocurrency strategies relied heavily on leverage and expectations, lacking other solid support. Following Donald Trump's return to the White House, global financial markets initially suffered a sharp decline before recovering; European defense stocks surged; and speculators fueled wave after wave of market frenzy. Some positions reaped astonishing returns, but others suffered devastating losses when market momentum reversed, funding channels dried up, or leverage took a negative turn.
As the year draws to a close, Bloomberg focuses on some of the most notable bets of 2025—including success stories, failures, and the holdings that defined the era. These deals have left investors worried about a host of "old problems" as they prepare for 2026: unstable companies, inflated valuations, and trend-following trades that "worked once but eventually failed."
Cryptocurrency: A Brief Boom for Trump-Related Assets
For the cryptocurrency space, "buying everything associated with the Trump brand" appears to be an extremely attractive momentum bet. During his presidential campaign and after taking office, Trump went all-in on digital assets (according to Bloomberg Terminal), pushing for sweeping reforms and placing industry allies in several powerful institutions. His family members also jumped on the bandwagon, endorsing various tokens and cryptocurrency companies, which traders see as "political fuel."
This "Trump-affiliated crypto asset matrix" quickly took shape: hours before the inauguration, Trump launched a Meme coin and promoted it on social media; First Lady Melania Trump subsequently launched her own personal token; later that year, World Liberty Financial, associated with the Trump family, opened its WLFI token for trading, allowing retail investors to purchase it. A series of "Trump-related" transactions followed—Eric Trump co-founded American Bitcoin, a publicly traded cryptocurrency mining company that went public in September through a merger.
The launch of each asset triggered a surge, but each surge was fleeting. As of December 23, Trump's Meme coin performed poorly, falling more than 80% from its January high; according to cryptocurrency data platform CoinGecko, Melania's Meme coin fell nearly 99%; and American Bitcoin's stock price fell about 80% from its September peak.
Politics fueled these transactions, but the laws of speculation ultimately brought them back to square one. Even with "supporters" in the White House, these assets couldn't escape the core cycle of cryptocurrencies: price increases → leveraged influx → liquidity depletion. Bitcoin, as an industry bellwether, is highly likely to record an annual loss this year after its October peak. For Trump-related assets, politics can bring short-term hype, but it cannot provide long-term protection.
—Olga Kharif (journalist)
Artificial intelligence trading: The next "big short"?
This transaction was revealed in a routine disclosure, but its impact is anything but "routine." On November 3, Scion Asset Management disclosed that it held protective put options on Nvidia and Palantir Technologies—two companies that have been the "core AI stocks" driving the market rally over the past three years. Although Scion is not a large hedge fund, its manager, Michael Burry, made the disclosure particularly noteworthy: Burry rose to fame for "predicting the 2008 subprime mortgage crisis" in his book and film of the same name, becoming a recognized "prophet" in the market.
The strike prices of the options are astonishing: Nvidia's strike price was 47% lower than the closing price at the time of disclosure, and Palantir's strike price was a staggering 76% lower. However, the mystery remains: due to "limited disclosure requirements," it's impossible to determine whether these put options (contracts that give investors the right to sell shares at a specific price before a specific date) were part of a more complex transaction; and the documents only reflect Cyon's holdings as of September 30th, leaving open the possibility that Burry subsequently reduced or liquidated his holdings.
However, market doubts about the "high valuations and high expenditures of AI giants" had already accumulated like "a pile of dry tinder." Burry's disclosure was like a match that ignited that tinder.
Burry's bearish bets on Nvidia and Palantir
The investor who rose to fame with "The Big Short" disclosed his put option positions in a 13F filing:
Following the announcement, Nvidia, the world's most valuable stock, plummeted, and Palantir also fell. The Nasdaq index subsequently saw a slight pullback, but all of these assets later recovered their losses.
While the exact amount of profit Burry made remains unknown, he left a clue on social media platform X: he stated that he bought Palantir put options at $1.84, and these options surged by 101% in less than three weeks. This disclosure document thoroughly exposed the underlying doubts beneath a market "dominated by a few AI stocks, massive passive fund inflows, and low volatility." Whether this trade ultimately proves to be "foresightful" or "overly hasty," it confirms a pattern: once market conviction falters, even the strongest market narratives can quickly reverse.
—Michael P. Regan (journalist)
Defense stocks: A surge under the new world order
The shifting geopolitical landscape has triggered a surge in "European defense stocks," a sector once considered "toxic assets" by asset management firms. Trump's plan to reduce funding for the Ukrainian military has spurred a military spending spree across Europe, leading to a sharp rise in the share prices of defense companies in the region: as of December 23, Germany's Rheinmetall AG had risen approximately 150% year-to-date, while Italy's Leonardo SpA had seen gains exceeding 90% over the same period.
Previously, many fund managers avoided the defense industry because of its "environmental, social, and governance" (ESG) investment principles; now, they have changed their attitudes, and some funds have even redefined their investment scope.
European defense stocks are expected to rise sharply in 2025.
Defense stocks in the region have risen more than at the beginning of the Russia-Ukraine conflict:
“We only reinstated defense assets into our ESG fund earlier this year,” said Pierre Alexis Dumont, chief investment officer at Sycomore Asset Management. “The market paradigm has shifted, and with a paradigm shift we have to both take responsibility and defend our values—so we are now focusing on assets related to ‘defensive weapons.’”
From goggle manufacturers and chemical producers to a printing company, stocks related to defense have been snapped up. As of December 23, the Bloomberg European Defense Stock Index had risen over 70% year-to-date. This frenzy has also spread to the credit market: even companies "indirectly related" to defense have attracted a large number of potential lenders; banks have even launched "European Defense Bonds"—modeled after green bonds, but with funds specifically earmarked for entities such as weapons manufacturers. This shift signifies a repositioning of "defense" from a "reputational liability" to a "public good," and also confirms the principle that when geopolitics shifts, capital flows often outpace ideological changes.
—Isolde MacDonogh (journalist)
Devaluation trades: fact or fiction?
The heavy debt burdens of major economies such as the United States, France, and Japan, coupled with a lack of political will to resolve their debt problems, have prompted some investors to flock to "anti-devaluation assets" such as gold and cryptocurrencies in 2025, while cooling their enthusiasm for government bonds and the US dollar. This strategy, labeled as "devaluation trading," is inspired by history: rulers such as the ancient Roman Emperor Nero used "diluting the value of currency" to cope with fiscal pressures.
In October, this narrative reached its climax: concerns about the U.S. fiscal outlook, coupled with the "longest government shutdown in history," led investors to seek safe-haven assets beyond the dollar. That month, gold and Bitcoin simultaneously hit all-time highs—a rare moment of synchronization for two assets often seen as "competitors."
Golden Record
"Devaluation trading" helps precious metals reach new highs:
As a "story," "devaluation" provides a clear explanation for the chaotic macroeconomic environment; but as a "trading strategy," its actual effects are far more complex. Subsequently, cryptocurrencies as a whole corrected, with Bitcoin prices falling sharply; the US dollar stabilized somewhat; and US Treasury bonds, far from collapsing, are poised for their best year since 2020—a reminder that concerns about "fiscal deterioration" may coexist with "demand for safe-haven assets," especially during periods of slowing economic growth and peaking policy interest rates.
The price movements of other assets diverged: fluctuations in metals such as copper, aluminum, and even silver were partly driven by concerns about currency devaluation and partly by Trump's tariff policies and macroeconomic forces, blurring the lines between inflation hedging and traditional supply shocks. Meanwhile, gold continued its upward trend, constantly hitting new historical highs. In this area, the "devaluation trade" remained effective—but it was no longer a complete rejection of fiat currency; rather, it was a precise bet on interest rates, policy, and safe-haven demand.
—Richard Henderson (journalist)
South Korean stock market: K-Pop-style surge
When it comes to plot twists and excitement, the performance of the South Korean stock market this year is enough to put Korean dramas to shame. Driven by President Lee Jae-myung's policy of "boosting the capital market," as of December 22, the South Korean benchmark stock index (Kospi) has risen by more than 70% by 2025, moving toward the "5,000-point target" proposed by Lee Jae-myung, and easily ranking first among the world's major stock indexes in terms of gains.
It's uncommon for political leaders to publicly set "stock index levels" as targets, and when Lee Jae-myung initially proposed the "Kospi 5000 points" plan, it didn't attract much attention. Now, a growing number of Wall Street banks, including JPMorgan Chase and Citigroup, believe this goal can be achieved by 2026—partly thanks to the global AI boom, which has led to a significant increase in demand for the South Korean stock market as a "core AI trading instrument in Asia."
South Korean stock market rebounds
South Korea's benchmark stock index surged:
In this "globally leading" rebound, there is a notable "absentee": South Korean domestic retail investors. Although Lee Jae-myung frequently emphasizes to voters that he was a retail investor before entering politics, his reform agenda has yet to convince domestic investors that "the stock market is worth holding long-term." Even with a massive influx of foreign capital into the South Korean stock market, domestic retail investors are still "net sellers": they have poured a record $33 billion into the US stock market and are chasing higher-risk investments such as cryptocurrencies and overseas leveraged ETFs.
This phenomenon has a side effect: the Korean won is under pressure. Capital outflows leading to a weaker won also serve as a reminder that even a "sensational rebound" in the stock market may mask the "lingering doubts" of domestic investors.
—Youkyung Lee (Reporter)
Bitcoin Showdown: Chanos vs. Cyrus
Every story has two sides, and the arbitrage game between short Jim Chanos and Strategy, the company of Bitcoin hoarder Michael Saylor, not only involves two highly individualistic people, but has also evolved into a "referendum" on "capitalism in the cryptocurrency era".
In early 2025, as Bitcoin prices surged, Strategy's stock price also skyrocketed. Chanos saw an opportunity: Strategy's stock price was trading at an excessive premium relative to its Bitcoin holdings, a premium the legendary investor believed was unsustainable. Therefore, he decided to "short Strategy and long Bitcoin," and publicly announced this strategy in May (when the premium was still high).
Chanos and Thaler then engaged in a public debate. In June, Thaler told Bloomberg TV, "I don't think Chanos understands our business model at all"; Chanos responded on social media platform X, calling Thaler's explanation "utter financial nonsense".
In July, Strategy's stock price hit a record high, up 57% year-to-date; however, as the number of "digital asset treasury companies" surged and crypto token prices fell from their peak, the stock prices of Strategy and its "imitators" began to decline, and Strategy's premium relative to Bitcoin also shrank—Chanos's bet began to pay off.
Strategy's stock performance has lagged behind Bitcoin this year.
Chanos' short trades paid off as the Strategy premium disappeared:
From Chanos's public announcement of short Strategy to his announcement on November 7th that he was "sell everything," Strategy's stock price plummeted by 42%. Beyond the profit and loss itself, this case reveals the cyclical booms and busts of cryptocurrency: balance sheets inflate due to "confidence," which in turn relies on "price increases" and "financial engineering." This pattern continues to work until "conviction wavers"—at which point, the "premium" is no longer an advantage but a problem.
—Monique Mulima (journalist)
Japanese government bonds: From "widow maker" to "rainmaker"
For decades, one bet has repeatedly discredited macro investors: the "widowmaker" trade of short Japanese government bonds. The logic behind this strategy seems simple: Japan carries a massive public debt, so interest rates will inevitably rise to attract enough buyers; investors then borrow government bonds and sell them, hoping to profit from rising interest rates and falling bond prices. However, for years, the Bank of Japan's loose monetary policy maintained low borrowing costs, causing short sellers to pay a heavy price—until 2025, when the situation finally reversed.
This year, the "widow maker" has transformed into a "rainmaker": yields on benchmark Japanese government bonds have surged across the board, turning the $7.4 trillion Japanese government bond market into a "short's paradise." The triggering factors are varied: the Bank of Japan's interest rate hikes and Prime Minister Sanae Takaichi's announcement of the "largest post-pandemic spending plan." The yield on the benchmark 10-year Japanese government bond broke through 2%, reaching a multi-decade high; the yield on the 30-year government bond rose by more than 1 percentage point, setting a new record. As of December 23, the Bloomberg Japan Government Bond Return Index had fallen by more than 6% this year, making it the worst-performing major bond market globally.
Japan's bond market plunged this year
The Bloomberg Japan Government Bond Index is the worst-performing major bond index globally.
Fund managers from institutions such as Schroders, Jupiter Asset Management, and RBC Blue Bay Asset Management have all publicly discussed "short Japanese government bonds in some form" this year; investors and strategists believe that this trade still has room to grow as benchmark policy rates rise. Furthermore, the Bank of Japan is reducing its government bond purchases, further pushing up yields; and Japan's government debt-to-GDP ratio is "far ahead" among developed countries, suggesting that bearish sentiment towards Japanese government bonds "may persist."
—Cormac Mullen (journalist)
Credit "Internal Strife": The Returns of the "Hardball Strategy"
The most lucrative credit returns in 2025 will not come from "betting on corporate recovery," but from "fighting back against peer investors." This model, known as "creditor-against-creditor confrontation," has brought huge success to institutions such as Pimco and King Street Capital Management—who orchestrated a precise "game" around Envision Healthcare, a healthcare company under the KKR Group.
Following the pandemic, hospital staffing service provider Envision faced difficulties and urgently needed loans from new investors. However, issuing new debt required "collateralizing already pledged assets": most creditors jointly opposed this plan, but Pimco, Golden Street Capital, and Partners Group "defected" to support it—their support enabled the proposal for "existing creditors to release collateralized assets (equity in Envision's high-value outpatient surgery business Amsurg) to guarantee the new debt" to be approved.
These institutions subsequently became "bondholders secured by Amsurg" and eventually converted their bonds into Amsurg equity. This year, Amsurg was sold to the healthcare group Ascension Health for $4 billion. It is estimated that these institutions that "betrayed their peers" received a return of approximately 90%—demonstrating the profit potential of "credit infighting."
This case reveals the rules of the current credit market: lenient terms and conditions, dispersed creditors, and "cooperation" is not necessary; "correct judgment" is often not enough, and "avoiding being overtaken by peers" is the greater risk.
—Eliza Ronalds-Hannon (journalist)
Fannie Mae and Freddie Mac: The Revenge of the "Toxic Twins"
Since the financial crisis, mortgage giants Fannie Mae and Freddie Mac have been under the control of the U.S. government, and the question of "when and how to break free from government control" has been a focus of market speculation. Supporters like hedge fund manager Bill Ackman have held long-term positions, hoping for huge profits from a "privatization plan," but due to the unchanged situation, the stocks of these two companies have remained stagnant in the pink sheets (over-the-counter market) for many years.
Trump's re-election changed this situation: the market optimistically anticipated that "the new administration would push the two companies out of control," and Fannie Mae and Freddie Mac stocks were instantly surrounded by "meme stock enthusiasm." In 2025, the enthusiasm intensified further: from the beginning of the year to the September peak, the two companies' stock prices surged by 367% (with an intraday increase of 388%), becoming one of the most eye-catching winners of the year.
Fannie Mae and Freddie Mac shares surged on privatization expectations.
People are increasingly willing to believe that these companies will break free from government control.
In August, news that the government was considering pushing two companies to IPO brought the buzz to a peak—the market expected the IPO valuation to exceed $500 billion, with plans to sell 5%-15% of shares to raise approximately $30 billion. Although market skepticism about the specific timing of the IPOs and whether they could actually be implemented caused stock prices to fluctuate from their September highs, most investors remained confident in the prospects.
In November, Ackerman released a proposal submitted to the White House suggesting that Fannie Mae and Freddie Mac be relisted on the New York Stock Exchange, while simultaneously writing down the U.S. Treasury's preferred stock in the two companies and exercising government-level options to acquire nearly 80% of the common stock. Even Michael Bury joined this camp: in early December, he announced a bullish stance on the two companies and stated in a 6,000-word blog post that these two companies, which had previously required government bailouts to avoid bankruptcy, might no longer be "toxic twins."
—Felice Maranz (journalist)
Turkish carry trade: a complete collapse
After a stellar performance in 2024, Turkish carry trades became a "consensus choice" for emerging market investors. At the time, Turkish domestic bond yields exceeded 40%, and the central bank pledged to maintain a stable dollar-pegged exchange rate, attracting traders to borrow at low cost from overseas and then buy high-yield Turkish assets. This trade attracted billions of dollars from institutions such as Deutsche Bank, Millennium Partners, and Gramese Capital. Some of these institutions' staff were still in Turkey on March 19, and on that very day, the trade collapsed completely within minutes.
The collapse was triggered that morning when Turkish police raided the residence of Istanbul's popular opposition mayor and detained him. This incident sparked a wave of protests, leading to a massive sell-off of the Turkish lira, with the central bank powerless to stem the currency's plunge. Kit Jürgensen, head of foreign exchange strategy at Société Générale in Paris, stated at the time, "Everyone was caught off guard, and no one will dare return to this market anytime soon."
By the close of trading that day, an estimated $10 billion had flowed out of Turkish lira-denominated assets, and the market never truly recovered. As of December 23, the lira had depreciated by approximately 17% against the dollar for the year, making it one of the worst-performing currencies globally. This event also served as a wake-up call for investors: high interest rates may offer returns for risk-takers, but they cannot protect against sudden political shocks.
——Kerim Karakaya (journalist)
Bond Market: "Cockroach Alarm" Sounded
The credit market in 2025 was not thrown into turmoil by a single "catastrophic collapse," but rather by a series of "small-scale crises"—crises that exposed some unsettling hidden dangers in the market. Companies that were once considered "regular borrowers" fell into difficulties one after another, causing lending institutions to suffer heavy losses as a result.
Saks Global restructured $2.2 billion in bonds after making only one interest payment; the restructured bonds now trade at less than 60% of their face value. New Fortress Energy's newly issued exchangeable bonds lost over 50% of their value within a year. The bankruptcies of Tricolor and First Brands wiped out billions of dollars in debt value within weeks. In some cases, sophisticated fraud was the root cause of the collapse; in others, the companies' initially optimistic earnings forecasts simply failed to materialize. But regardless, investors must confront one question: why did they make such large-scale credit bets on these companies when they had virtually no evidence to prove their ability to repay their debts?
Years of low default rates and loose monetary policy have eroded various standards in the credit market—from lender protection clauses to basic underwriting processes, none have been spared. Institutions that lent to First Brand and Sanshe Company did not even discover that these two companies had engaged in violations such as "double pledging assets" and "commingling collateral for multiple loans."
JPMorgan Chase is also one of these lending institutions. In October, the bank's CEO, Jamie Dimon, warned the market, using a vivid analogy to remind investors to be wary of the risks: "When you see one cockroach, there are likely many more lurking in the shadows." This "cockroach risk" may become one of the core themes of the market in 2026.
—Eliza Ronalds-Hannon (journalist)
