2025 Global Trading Atlas: 11 Key Trades Intertwined with Politics and Markets

Written by: Bloomberg

Translated by: Saoirse, Foresight News

This is yet another year filled with “high conviction bets” and “rapid reversals.”

From Tokyo’s bond trading desk, New York’s credit committee, to Istanbul’s forex traders, the markets have delivered unexpected gains and caused intense volatility. Gold prices hit record highs, solid mortgage giants’ stock prices swung wildly like “Meme stocks” (stocks driven by social media hype), and a textbook-level arbitrage trade collapsed in an instant.

Investors heavily bet on political upheavals, expanding balance sheets, and fragile market narratives, driving stocks sharply higher, yield trades crowded, while crypto strategies relied heavily on leverage and expectations, lacking other solid support. After Donald Trump returned to the White House, global financial markets first plunged then recovered; European defense stocks ignited a frenzy; speculators sparked one market craze after another. Some holdings yielded astonishing returns, but when market momentum reversed, financing dried up, or leverage turned negative, others suffered devastating losses.

As the year draws to a close, Bloomberg focuses on the most notable bets for 2025—including successful cases, failures, and those that defined this era. These trades leave investors worried about a series of “old problems” as they prepare for 2026: unstable companies, overvaluations, and trend-following trades that “worked once but ultimately failed.”

Cryptocurrency: The brief frenzy of Trump-related assets

For the crypto space, “buying up all assets related to the Trump brand” seemed like a highly momentum-driven bet. During the presidential campaign and after inauguration, Trump “went all-in” (according to Bloomberg Terminal reports) in digital assets, pushing for comprehensive reforms and installing industry allies in key agencies. His family also entered the scene, endorsing various tokens and crypto companies, which traders saw as “political fuel.”

This “Trump crypto matrix” quickly took shape: hours before the inauguration, Trump launched a Meme coin and promoted it on social media; First Lady Melania Trump soon launched her own personal token; later that year, World Liberty Financial, linked to the Trump family, opened trading of its WLFI token for retail investors. A series of “Trump-related” trades followed—Eric Trump co-founded American Bitcoin, a publicly traded crypto mining company that went public via M&A in September.

In a store in Hong Kong, a cartoon portrait of Donald Trump holding a crypto token with the White House in the background commemorates his inauguration. Photographer: Paul Yang / Bloomberg

Each asset launch triggered a rally, but each rally was fleeting. As of December 23, Trump Meme coins performed poorly, down over 80% from January highs; according to crypto data platform CoinGecko, Melania Meme coins fell nearly 99%; American Bitcoin’s stock price dropped about 80% from September peak.

Politics provided the push for these trades, but the laws of speculation ultimately pulled them back. Even with “supporters” in the White House, these assets could not escape the core crypto cycle: price rises → leverage inflates → liquidity dries up. Bitcoin, the industry bellwether, has likely recorded a yearly loss after its October peak. For Trump-related assets, politics can generate short-term hype but cannot provide long-term protection.

— Olga Kharif (Reporter)

AI Trading: The Next “Big Short”?

This trade was exposed in a routine disclosure document, but its impact was anything but routine. On November 3, Scion Asset Management disclosed holdings of Nvidia and Palantir Technologies protective put options—two “core AI stocks” that drove market gains over the past three years. Although Scion is not a large hedge fund, its manager Michael Burry drew widespread attention: Burry, famous for predicting the 2008 subprime crisis in “The Big Short” book and film, is recognized as a “seer” in the market.

The strike prices of these options were shocking: Nvidia’s strike was 47% below its closing price at disclosure, Palantir’s was 76% lower. But the mystery remains: due to “limited disclosure requirements,” it’s unclear whether these puts are part of more complex trades; and the document only reflects Scion’s holdings as of September 30, leaving open the possibility that Burry reduced or liquidated his positions afterward.

However, skepticism about “AI giants’ overvaluation and high spending” has been piling up like “a pile of dry wood.” Burry’s disclosure is like a match igniting that pile.

Burry’s bearish bets on Nvidia and Palantir

Famous for “The Big Short,” the investor disclosed put options holdings in a 13F filing:

Source: Bloomberg, data standardized by percentage increase as of December 31, 2024

After the announcement, the world’s most valuable stock, Nvidia, plummeted, and Palantir also declined, with the Nasdaq index slightly retreating. However, these assets later recovered.

It’s unclear how much Burry profited, but he left a clue on social platform X: he bought Palantir puts at $1.84, which surged 101% in less than three weeks. This disclosure exposed the underlying doubts in a market dominated by “a few AI stocks, massive passive inflows, and low volatility.” Whether this trade proves to be “foresight” or “hasty,” it confirms a rule: once market confidence wavers, even the strongest narratives can quickly reverse.

— Michael P. Regan (Reporter)

Defense Stocks: Explosive Under the New World Order

Geopolitical shifts have turned the “European defense stocks” sector—once considered a “toxic asset” by asset managers—into a breakout. Trump’s plan to cut funding to Ukraine prompted European governments to launch a “military spending spree,” causing defense stocks in the region to soar: as of December 23, Rheinmetall AG in Germany rose about 150% year-to-date, Leonardo SpA in Italy gained over 90%.

Previously, many fund managers avoided the defense industry due to “ESG” principles, citing “controversy.” Now, they are changing course, with some redefining their investment scope.

European defense stocks surge in 2025

The region’s defense stocks have outperformed their initial surge during the Russia-Ukraine conflict:

Source: Bloomberg, Goldman Sachs

“Until early this year, we only reintroduced defense assets into ESG funds,” said Pierre-Alexis Dumenil, CIO of Sycomore Asset Management. “The paradigm has shifted, and when it does, we must take responsibility and defend our values—so now we focus on ‘defensive weapons’ related assets.”

From goggle manufacturers, chemical producers, to a printing company, stocks related to defense are being snapped up. As of December 23, the Bloomberg European Defense Index rose over 70% this year. The craze has spread to credit markets: even companies indirectly related to defense attracted many potential lenders; banks have launched “European defense bonds”—modeled after green bonds but funding weapons manufacturers and related entities. This shift marks a redefinition of “defense” from “reputation liability” to “public good,” illustrating that when geopolitics shifts, capital flows often outpace ideological change.

— Isolde MacDonogh (Reporter)

Devaluation Trades: Fact or Fiction?

Heavy debt burdens in major economies like the US, France, and Japan, coupled with a lack of political will to solve debt issues, have led some investors in 2025 to seek “devaluation-proof” assets like gold and cryptocurrencies, cooling enthusiasm for government bonds and the dollar. This strategy has been labeled as “devaluation trade” bearish, inspired by history: Roman emperors like Nero once diluted currency value to cope with fiscal pressures.

In October, this narrative peaked: concerns over US fiscal outlook, combined with the “longest government shutdown in history,” prompted investors to seek safe havens outside the dollar. That month, gold and Bitcoin hit record highs simultaneously—a rare moment for these two assets often seen as “competitors.”

Gold hits record

“Devaluation trades” helped push precious metals to new highs:

Source: Bloomberg

As a “story,” “devaluation” offers a clear explanation for chaotic macro environments; but as a “trading strategy,” its actual effectiveness is much more complex. Subsequently, cryptocurrencies retreated, Bitcoin’s price fell sharply; the dollar stabilized; US Treasuries not only avoided collapse but are poised for their best year since 2020—reminding us that fears of “fiscal deterioration” can coexist with “demand for safe assets,” especially during slowing growth and peak policy rates.

Prices of other assets diverged: metals like copper, aluminum, and even silver fluctuated, partly driven by “currency devaluation fears,” and partly by Trump’s tariffs and macro forces, blurring the line between “inflation hedges” and “traditional supply shocks.” Meanwhile, gold continued to strengthen, hitting new records. In this realm, “devaluation trades” remain effective—but no longer as a total rejection of fiat currency, but as precise bets on “interest rates, policies, and risk aversion.”

— Richard Henderson (Reporter)

Korean Stock Market: “K-Pop Style” Surge

When it comes to plot twists and excitement, this year’s Korean stock market performance could give K-dramas a run for their money. Under President Lee Jae-myung’s “boost the capital market” policies, as of December 22, the Kospi index has gained over 70% in 2025, heading toward Lee’s “5000-point target,” easily topping global stock gain charts.

It’s rare for political leaders to openly set “index targets,” and Lee’s initial “Kospi 5000” plan didn’t attract much attention. Now, more Wall Street banks like JPMorgan and Citigroup believe this target could be achieved by 2026—partly fueled by the global AI boom, as South Korea’s stock market demand surged due to its role as an “Asian AI core trading target.”

Korean stock rebound

Korea’s benchmark index soars:

Source: Bloomberg

In this “world-leading” rebound, one obvious “absent” is local retail investors. Despite Lee often emphasizing “he was a retail investor before politics,” his reform agenda has yet to convince domestic investors that “stocks are worth holding long-term.” Even with heavy foreign inflows, retail investors are “net sellers”: they poured a record $33 billion into US stocks and chased higher-risk investments like cryptocurrencies and overseas leveraged ETFs.

This phenomenon has a side effect: the won is under pressure. Capital outflows weaken the won, reminding outsiders that even a “spectacular stock rally” can mask “persistent domestic doubts.”

— Youkyung Lee (Reporter)

Bitcoin Duel: Chanos vs Saylor

Every story has two sides, and the game of short Jim Chanos and “Bitcoin hoarder” Michael Saylor’s Strategy company is no exception. It’s a contest involving two highly individual characters, evolving into a “referendum” on “capitalism in the crypto era.”

In early 2025, Bitcoin prices soared, and Strategy’s stock surged in tandem. Chanos saw an opportunity: he believed Strategy’s stock was overvalued relative to its “Bitcoin holdings,” and that “such a premium is unsustainable.” So, he decided to “short Strategy and go long Bitcoin,” revealing this strategy publicly in May (when the premium was still high).

Chanos and Saylor then engaged in a public feud. In June, Saylor told Bloomberg TV: “I think Chanos doesn’t understand our business model at all”; Chanos responded on X, calling Saylor’s explanation “complete financial nonsense.”

In July, Strategy hit a record, up 57% year-to-date; but as the number of “digital asset treasury” companies surged and crypto prices retreated from highs, Strategy and its “imitators” saw their stocks decline, and the Strategy premium over Bitcoin shrank—Chanos’s bet started paying off.

This year, Strategy’s stock underperformed Bitcoin

As the Strategy premium disappeared, Chanos’s short position paid off:

Source: Bloomberg, data standardized by percentage increase as of December 31, 2024

From publicly shorting Strategy to announcing “liquidation” on November 7, Strategy’s stock fell 42%. Beyond the gains or losses, this case reveals the recurring cycle of “booms and busts” in crypto: balance sheets inflated by “confidence,” which depends on “rising prices” and “financial engineering.” This pattern works until “belief wavers”— at which point, “premium” is no longer an advantage but a liability.

— Monique Mulima (Reporter)

Japanese Government Bonds: From “Widow Maker” to “Rainmaker”

For decades, a bet called the “widow maker”—shorting Japanese government bonds—has repeatedly tripped up macro investors. The logic seemed simple: Japan’s massive public debt would eventually push interest rates “higher” to attract buyers; investors would “borrow and sell” bonds, expecting “rising rates and falling prices.” But years of ultra-loose BOJ policies kept borrowing costs low, punishing “shorts”—until 2025, when the situation finally reversed.

This year, the “widow maker” turned into the “rainmaker”: yields on Japanese government bonds soared across the board, turning the ¥74 trillion ($550 billion) Japanese bond market into a “shorts’ paradise.” Triggers were diverse: BOJ rate hikes, Prime Minister Fumio Kishida’s “largest post-pandemic spending plan.” The 10-year yield broke 2%, hitting multi-decade highs; 30-year yields rose over 1 percentage point, setting records. By December 23, Bloomberg’s Japan Bond Return Index fell over 6% this year, making it the worst-performing major bond market globally.

Japan’s bond market crashes in 2025

Bloomberg Japan Bond Index is the worst-performing major bond index globally:

Source: Bloomberg, data standardized by percentage increase as of December 31, 2024, and January 6, 2025

Fund managers from Schroders, Jupiter Asset Management, and Royal Bank of Canada Bayview Asset Management have publicly discussed “shorting Japanese bonds in some form” this year; investors and strategists believe there’s still room for this trade as benchmark rates rise. Additionally, the BOJ is reducing bond purchases, further pushing yields higher; Japan’s debt-to-GDP ratio remains the highest among developed nations, and bearish sentiment on Japanese bonds “may persist.”

— Cormac Mullen (Reporter)

Credit “Internal Strife”: The “Hardball Strategy” Returns

The most lucrative credit returns in 2025 didn’t come from “betting on corporate recovery” but from “counterattacking fellow investors.” This “creditholder vs. creditholder” pattern has benefited firms like Pacific Investment Management Co. (Pimco) and King Street Capital Management—who orchestrated a precise “game” around KKR’s healthcare company Envision Healthcare.

Post-pandemic, Envision, a hospital staffing firm, faced difficulties and needed loans from new investors. But issuing new debt required “collateralizing pledged assets”: most creditors opposed, but Pimco, King Street, and Partners Group “defected” in support—allowing the “old creditors” to release collateral (such as Envision’s high-value outpatient surgery business Amsurg) and back new debt.

Amsurg was sold to Ascension for $4 billion, bringing substantial returns to funds including Pimco. Photographers: Jeff Adkins

These institutions then became “bondholders secured by Amsurg” and eventually converted bonds into Amsurg equity. In 2025, Amsurg was sold for $4 billion to Ascension Health. These “fellow traders’ betrayal” firms earned about 90% returns—highlighting the profit potential of “credit internal strife.”

This case reveals the current rules of the credit market: loose contractual terms, dispersed creditors, “cooperation” is not necessary; “correct judgment” is often insufficient, and “avoiding being outflanked” is the bigger risk.

— Eliza Ronalds-Hannon (Reporter)

Fannie Mae and Freddie Mac: The “Toxic Twins” Revenge

Since the financial crisis, mortgage giants Fannie Mae and Freddie Mac have been under U.S. government control. When and how to exit this control has been a market focus. Long-term supporters like hedge fund manager Bill Ackman held positions expecting “privatization” to bring huge profits, but with no change, their stocks have languished in OTC markets for years.

Trump’s reelection changed the game: markets anticipated “the new administration will push the two companies to exit control,” and their stocks were suddenly “Meme stock-like” hot. In 2025, the hype intensified: from the start of the year to September’s peak, their stocks soared 367% (intraday gains reached 388%), making them among this year’s top winners.

Fannie and Freddie stocks surge on privatization hopes

More and more believe these companies will break free from government control.

Source: Bloomberg, data standardized by percentage increase as of December 31, 2024

In August, news that “the government is considering an IPO for the two” pushed the hype to a peak—market estimates valued the IPO at over $500 billion, planning to sell 5%-15% for about $30 billion. Though skepticism remains about timing and feasibility, most investors still hold confidence.

In November, Ackman announced a proposal to relist Fannie and Freddie on NYSE, reduce the U.S. Treasury’s preferred stock holdings, and exercise government options to acquire nearly 80% of common stock. Even Michael Burry joined this camp: in early December, he declared a bullish stance on the two, writing a 6,000-word blog post suggesting these companies, once rescued by the government to avoid bankruptcy, might “no longer be the ‘Toxic Twins.’”

— Felice Maranz (Reporter)

Turkey Carry Trade: Complete Collapse

After a stellar 2024, Turkey’s carry trade became a “consensus choice” among emerging market investors. At the time, Turkey’s local bond yields exceeded 40%, and the central bank promised to maintain a stable dollar peg. Traders flooded in—borrowing overseas at low cost and buying high-yield Turkish assets. This trade attracted billions from institutions like Deutsche Bank, Millennium Partners, and Gramercy Capital, with some staff on the ground in Turkey on March 19. That same day, the trade collapsed within minutes.

The trigger was early that morning: Turkish police raided the residence of Istanbul’s popular opposition mayor and detained him. The event sparked protests, the lira plunged, and the central bank was powerless to stop the currency’s free fall. Kévin Jux, FX strategist at Société Générale in Paris, said: “Everyone was caught off guard; no one will dare re-enter this market in the short term.”

After the mayor’s detention, students held Turkish flags and banners during protests. Photographer: Karem Uzer / Bloomberg

By market close that day, outflows from Turkish lira-denominated assets were estimated at around $10 billion, and the market has never truly recovered. As of December 23, the lira depreciated about 17% against the dollar for the year, making it one of the worst currencies globally. The event also warns investors: high interest rates may reward risk-takers but cannot withstand sudden political shocks.

— Kerim Karakaya (Reporter)

Bond Market: “Cockroach Alarm” Sounds

The 2025 credit market was not shaken by a single “catastrophic crash,” but by a series of “small crises” exposing unsettling vulnerabilities. Former “routine borrowers” faced repeated distress, causing lenders to suffer heavy losses.

Saks Global restructured its $2.2 billion bonds after paying interest only once; the new bonds now trade below 60% of face value. New Fortress Energy’s exchange bonds lost over 50% of value within a year. Tricolor and First Brands went bankrupt within weeks, wiping out billions in claims. In some cases, complex fraud was the root cause; in others, overly optimistic performance forecasts failed to materialize. Regardless, investors face a key question: why did they make large-scale loans to these companies when there’s little evidence they can repay?

JPMorgan Chase was burned by a “cockroach” in credit, and Jamie Dimon warns more may follow. Photographer: Eva Marie Uzkatgi / Bloomberg

Years of low default rates and loose monetary policy have eroded credit standards—from protections for lenders to underwriting processes. Even lenders to First Brands and Tricolor failed to detect violations like “repeated collateralization” or “commingling of collateral.”

JPMorgan is among these lenders. CEO Jamie Dimon warned in October: “When you see a cockroach, there are probably more hiding in the dark.” This “cockroach risk” may become a key theme in the 2026 market.

— Eliza Ronalds-Hannon (Reporter)