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

Author: Bloomberg

Translation: Saoirse, Foresight News

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

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

Investors heavily bet on political shifts, bloated balance sheets, and fragile market narratives, driving stocks higher and piling into yield trades, while crypto strategies relied heavily on leverage and expectations, lacking other solid supports. After Donald Trump’s return 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, funding 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 anxious 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: Trump-Related Assets’ Brief Frenzy

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 firms, 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 sparked a rally, but each 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 its September peak.

Politics provided the push, but the laws of speculation ultimately pulled these assets 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’s bellwether, has likely recorded a yearly loss after its October peak. For Trump-related assets, politics can generate short-term hype but cannot offer 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 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 market prophet.

The strike prices of these options were shocking: Nvidia’s strike was 47% below its closing price at disclosure; Palantir’s was 76% lower. Yet, the mystery remains: due to “limited disclosure requirements,” outsiders cannot determine 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 position afterward.

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

Burry’s Short Bet 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 experiencing a slight pullback. However, these assets later recovered all losses.

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 by 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 Growth in a New World Order

Shifts in geopolitical landscape have sparked a boom in “European defense stocks,” once considered “toxic assets” by asset managers. 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, and Leonardo SpA in Italy gained over 90%.

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

2025 European Defense Stocks Surge

The region’s defense stocks have outperformed their early 2022 levels:

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 Stock Index has gained over 70% this year. The craze has spilled into credit markets: even companies indirectly related to defense attract many potential lenders; banks have launched “European defense bonds”—modeled on green bonds but funding weapons manufacturers and similar entities. This shift marks a redefinition of “defense” from “reputation liability” to “public good,” confirming that when geopolitics shifts, capital flows faster than 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 resolve debt issues, have led some investors in 2025 to seek “devaluation-proof” assets like gold and cryptocurrencies, while cooling enthusiasm for government bonds and the dollar. This strategy has been labeled “devaluation trade” bearish, inspired by history: Roman emperors like Nero once diluted currency value to address 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—rare for these two assets often seen as “competitors.”

Gold Record

“Devaluation trades” helped gold and other precious metals reach new highs:

Source: Bloomberg

As a “story,” “devaluation” offers a clear explanation for the chaotic macro environment; 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 may have 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 silver fluctuated due to “devaluation fears” and macro forces like Trump’s tariffs, 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)

South Korean Stock Market: “K-Pop” Style Surge

When it comes to plot twists and excitement, South Korea’s stock market this year outshines even K-dramas. Under President Lee Jae-myung’s “boost the capital markets” policy, as of December 22, the Kospi index has gained over 70% in 2025, heading toward Lee’s “5000-point target,” and comfortably leading global gainers.

It’s rare for political leaders to openly set “index targets,” and Lee’s initial “Kospi 5000” plan drew little attention. Now, more Wall Street banks like JPMorgan and Citigroup believe this goal could be achieved by 2026—partly fueled by the global AI boom, as South Korea’s stock market benefits from its role as “Asia’s core AI trading target.”

Korean Stock Market Rebound

South Korea’s benchmark index soared:

Source: Bloomberg

In this “world-leading” rally, one obvious “absentee” is domestic retail investors. Despite Lee Jae-myung often emphasizing “he was a retail investor before politics,” his reform agenda has yet to convince local 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 chase 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 rally” can mask “persistent doubts” among domestic investors.

— Youkyung Lee (Reporter)

Bitcoin Showdown: Chanos vs. Saylor

Every story has two sides, and the arbitrage game between short-seller Jim Chanos and “Bitcoin hoarder” Michael Saylor’s Strategy firm is no exception. It involves two highly individual characters and has evolved 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: Strategy’s stock was trading at a premium relative to its Bitcoin holdings, and he believed “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 Strategy’s premium over Bitcoin shrank—Chanos’s bet started paying off.

Strategy’s Stock Underperformed Bitcoin This Year

As Strategy’s 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 profit and loss, this case reveals the recurring cycle of “booms and busts” in crypto: balance sheets inflated by “confidence,” which in turn depends on “rising prices” and “financial engineering.” This pattern works until “belief wavers”— at which point, “premium” ceases to be an advantage and becomes a problem.

— Monique Mulima (Reporter)

US Treasuries: From “Widow Maker” to “Rainmaker”

For decades, a bet called the “Widow Maker”—shorting US Treasuries—kept macro investors repeatedly wrong-footed. The logic seemed simple: with huge public debt, rates would “rise eventually” to attract buyers; investors would “borrow and sell” Treasuries, profiting from “rising rates and falling prices.” But years of ultra-loose Fed policies kept borrowing costs low, punishing “shorts”—until 2025, when the tide finally turned.

This year, the “Widow Maker” turned into the “Rainmaker”: yields on benchmark government bonds soared across the board, making Japan’s $7.4 trillion bond market a “shorts’ paradise.” Triggers were diverse: the Bank of Japan raising rates, Prime Minister Fumio Kishida launching the “largest post-pandemic spending plan.” The 10-year Japanese government bond yield broke 2%, hitting multi-decade highs; 30-year yields rose over 1 percentage point, setting records. As of December 23, Bloomberg’s Japan Bond Return Index fell over 6% this year, making it the worst major bond market globally.

Japan Bond Market Crashes This Year

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 BlueBay 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 policy rates rise. Additionally, the Bank of Japan 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 “Intra-Party Fight”: 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 allowed firms like Pacific Investment Management (Pimco) and King Street Capital Management to score big—by orchestrating 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 high-value outpatient surgery business Amsurg’s equity) and back new debt.

Amsurg’s sale to Ascension brought rich returns for funds including Pimco. Photographer: Jeff Adkins

These institutions then became “bondholders secured by Amsurg” and eventually converted bonds into Amsurg equity. This year, Amsurg was sold for $4 billion to Ascension Health. Data shows these “betraying peers” earned about 90% returns—confirming the profit potential of “credit intra-party fights.”

This case reveals the current rules of the credit market: loose contractual terms, dispersed creditors, “cooperation” is not necessary; “judging correctly” is often not enough—“avoiding being overtaken by peers” 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, and “when and how to exit” has been a market focus. Long-term supporters like hedge fund manager Bill Ackman held large positions, hoping “privatization” would bring huge profits. But with no change in the situation, their stocks have languished in the OTC market for years.

Trump’s reelection changed the game: markets expected “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 some of the year’s biggest winners.

Fannie and Freddie Stocks Soar on Privatization Hopes

People increasingly 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 was considering an IPO for the two firms pushed sentiment to a peak—market estimates valued the IPO at over $500 billion, planning to sell 5-15% of shares to raise about $30 billion. Despite skepticism about timing and feasibility, most investors remained confident.

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 firms, writing in a 6,000-word blog that these companies, once rescued by the government to avoid bankruptcy, might “no longer be the ‘Toxic Twins.’”

— Felice Maranz (Reporter)

Turkish Carry Trade: Total Collapse

After a stellar 2024, Turkey’s carry trade became a “consensus choice” among emerging market investors. At the time, Turkish local bonds yielded over 40%, and the central bank promised to maintain a stable dollar peg. Traders flooded in—borrowing cheaply abroad and buying high-yield Turkish assets. This trade attracted billions from institutions like Deutsche Bank, Millennium Partners, and Gresham 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. Kiyotaki & Moore, a foreign exchange strategist at Societe Generale in Paris, said: “Everyone was caught off guard; no one will dare re-enter this market in the short term.”

After the detention of Istanbul Mayor Ekrem Imamoglu, students held Turkish flags and slogans during protests. Photographer: Karem Uzer / Bloomberg

By market close, estimated capital outflows from Turkish lira assets reached about $10 billion, and the market has never truly recovered. As of December 23, the lira depreciated about 17% against the dollar this 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 Alert” Sounds

The 2025 credit market was not rocked by a single “catastrophic collapse,” but by a series of “small crises” exposing troubling vulnerabilities. Once considered “routine borrowers,” some companies faced repeated distress, causing lenders heavy losses.

Saks Global restructured $2.2 billion in bonds after missing a single interest payment, and the restructured bonds now trade below 60% of face value; New Fortress Energy’s new exchange bonds lost over 50% in a year; Tricolor and First Brands filed for bankruptcy within weeks, wiping out billions in claims. In some cases, complex fraud was at the root of collapse; 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 was little evidence they could repay?

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

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

JPMorgan Chase 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)