Global Financial Markets 2025: Between Desire and Collapse

2025 will be remembered in financial market history as a period filled with excessive expectations and the collapse of traditional investment paradigms. From the risky bets of startup investors to the remarkable recovery of long-lost assets, the market has provided many lessons for risk-takers. Throughout the year, global investors have witnessed hope, desire, and the collapse of financial priorities. Here are the patterns and key lessons that this year has written for us.

The “Trump-Related” Asset Era: Bubble Boom

After Donald Trump returned to the White House, the cryptocurrency industry was filled with hope that political gods would elevate digital assets to heaven. The launch of Trump family meme coins and related brand assets signified a major desire among retail investors to buy everything.

When the American Bitcoin company of the family went public mid-year, institutions interpreted this move as a sign of a digital golden age revival. But this boom lacked a solid economic foundation. Within months, Trump meme coin prices fell over 80%, while Melania Trump’s meme coin dropped nearly 99%. This pattern reveals the core mechanism of the crypto market: confidence → leverage inflows → liquidity drought.

Policies may generate short-term hype but cannot change the market’s fundamental dynamics.

Betting on Artificial Intelligence: When Old Forecasters “See the Goat”

In November, Michael Burry, famous for predicting the 2008 crisis, revealed that he held massive put options on Nvidia and Palantir stocks.

What’s interesting is the price: Nvidia’s put options were nearly half the market price, while Palantir’s were less than a quarter. He cited “overvaluation of AI giants” as a red flag.

Burry’s signals are seen as a spark that ignited market fears. The underlying concern is straightforward: the stock market is heavily weighted with AI stocks, passive capital flows are enormous, and volatility remains low.

High-Risk Price Manipulation

Market uncertainty about AI assets has been building for a long time. When Burry hinted at these issues, stock prices plummeted. Although Nasdaq’s team initially adjusted downward slightly, the risk was already apparent: is the large market truly strong or just wishful thinking? That’s the question facing the industry.

Geopolitical Restructuring: Defense Stocks as States

Geopolitical shifts have reversed asset managers’ attitudes toward defense sectors, which were previously avoided for ESG and social reasons.

German company Rheinmetall rose over 150% since the start of the year, while Italy’s Leonardo increased over 90% in the same period. Wall Street banks that once rejected defense assets are now embracing them.

Some ESG funds have revised their investment scope to include “defense weapons.” Here’s a lesson: when geopolitics change, capital often shifts faster than ideology.

Dollar Hedging: Gold and Bitcoin Meet in the Trough

Concerns over massive US, France, and Japan public debt, coupled with a lack of political will to address it, pushed some investors toward “devaluation-resistant assets” mid-year. Fears about US finances peaked, and suddenly, gold and Bitcoin surged to record highs simultaneously.

This movement reflects fears of “currency devaluation.” However, as the situation eased, the dollar stabilized, Bitcoin’s price fell, and US government bonds once again became the “safe assets.” For gold, the outlook remains bullish, but no longer due to devaluation; instead, because “safe assets” are now in demand.

South Korean Stock Market: K-pop Level Martin Galle

South Korea’s stock market this year was full of a “world-leading” recovery story, but with a key “missing”: domestic retail investors.

The Kospi index rose over 70% this year, despite President Yoon Suk-yeol’s challenge to reach “5,000 points.” Many Wall Street banks, including JPMorgan Chase, believe this target remains possible. However, the price gap between South Korean stocks and Bitcoin has narrowed. Domestic investors are seen as “net sellers,” channeling funds into Bitcoin and leveraged foreign ETFs.

This phenomenon underscores a key lesson: even an exciting stock market rebound can mask underlying “uncertainties” beneath the surface.

Bitcoin Battle: Chanos vs. Saylor

The history of digital currencies is full of opposing bets. Jim Chanos’s short-selling game against Michael Saylor’s strategy has its own distinct character.

When Strategy stocks surged early in the year, Chanos, a short seller, detected an inconsistency between stock prices and Bitcoin holdings. He decided to short and publicly announced it. Saylor, who was accumulating Bitcoin, countered, and both engaged in public disputes via media and social media.

Strategy stocks hit their mid-year peak, rising 57% since the start of the year. But as more companies “imitated” and Bitcoin’s price declined from its peak, the premium disappeared, and Chanos’s bet started to pay off. By year-end, Strategy stocks had fallen 42% compared to Chanos’s short sale announcement.

This case reveals the recurring cycle of the crypto market: confidence → price spread → disintegration.

“Dead” Collateral: When High Interest Rates Are Hidden

Envision Healthcare needed urgent debt after the pandemic. When attempting to issue new debt, the structure initially used pledged assets as collateral.

Some investors opposed, but Pimco, Golden Street Capital, and Partners Group “switched sides” to support. The result was a messy situation: collateral assets, including outpatient surgery business Amsurg, were released, and Amsurg was eventually sold to Ascension Health for $4 billion.

These investors who “betrayed their peers” earned about 90%. This case exposes a new condition in the lending market: dispersed creditors, relaxed conditions, and “cooperation” are no longer necessary. The remaining question is: who will be next?

Fannie Mae and Freddie Mac: From Mistakes to Hope

Since the 2008 crisis, Fannie Mae and Freddie Mac have been under government control. The market has speculated about private sector involvement for years.

With Trump’s reelection, expectations shifted. The market anticipated that “the new government would let the two companies grow uncontrollably.” Their stocks were surrounded by meme-stock frenzy.

From the start of the year to September’s peak, their stock prices surged 367%. Despite IPO uncertainties causing volatility, many still believed in the opportunity.

Japanese Bonds: The New Golden Era for Shorts

For decades, investors have tried to short Japanese government bonds. The logic is simple: massive public debt + inevitable rising interest rates = profit opportunity.

However, Japan’s accommodative monetary policy kept borrowing costs low. Short sellers paid high prices until 2025.

The “force that harms many” turned into “massive income.” Japanese government bond yields soared across the board. The $7.4 trillion bond market became a “short seller’s paradise.”

By year-end, Japan’s Bloomberg government bond index fell over 6%, making it the worst-performing bond market in the world.

Credit Markets: The “Cockroach” Warning Sounds

The credit market has not experienced a single “big collapse” but multiple “small crises,” revealing hidden risks.

Saks Global restructured $2.2 billion in debt after paying interest just once. New Fortress Energy’s convertible bonds lost over 50% of their value within a year. Tricolor and First Brands’ bankruptcies wiped out billions of dollars of debt.

The real secret: why did financial institutions invest heavily in these companies when there’s little evidence they can repay?

JPMorgan Chase is among the “deceived” institutions, and CEO Jamie Dimon used a vivid metaphor: “When you see one cockroach, there are likely many hiding in the shadows.”

This “cockroach” risk could become a major issue in the coming year.

Major Lesson: When Confidence Wavers

2025 was defined by bets: Trump, AI, stocks, defense assets, and Fannie Mae—all are bets. The herd bubble, contradictions, successes, and failures all demonstrate a fundamental rule: when market confidence falters, even the strongest stories can turn quickly.

Investors should remember: there is no “safe” profit from all endeavors, and no “permanent trend” can destroy your capital.