Bubble, Cockroach, and the 367% Surge Phenomenon: How to Check Kids in the Global Financial Market 2025

The past year in the global markets has offered a fleeting lesson of “high confidence” turning into “sudden reversal,” cycling from Japanese bond trading desks to the boardrooms in New York, from Istanbul’s foreign exchange markets to artificial intelligence programming rooms. The markets brought both enormous profits and intense risks. Gold prices soared to record-breaking highs, and major mortgage lenders surged like speculative stocks, while traditional trading strategies collapsed instantly.

Investors heavily wagered on political changes, budget inflation, and market uncertainty, which drove stock markets higher and widespread trading of yields. Meanwhile, cryptocurrency strategies lacked any foundation other than leverage and desire. After Donald Trump’s return, the global financial markets initially experienced a downturn, then recovered. European defense industry stocks skyrocketed, and speculators ignited market frenzy in waves. Some positions generated massive returns, while others suffered heavy losses as momentum shifted. By the end of the year, Bloomberg compiled the most remarkable investment stories of 2025, encompassing successes, failures, and stocks that defined this era—viewed through commodities like aluminum facing market uncertainty.

Cryptocurrencies: Short-term waves of assets related to Trump

For the crypto community, “all-in on Trump-branded assets” seemed like an extremely attractive opportunity—from presidential election campaign fundraising to post-inauguration deep involvement in digital assets. Trump pushed major reforms and appointed allies in influential institutions. His family members also joined the trend, supporting tokens and crypto companies seen as “policy-driven fuel.”

From the launch of Trump’s Meme coin just hours before the inauguration to Melania Trump’s personal token, then to the Trump family’s World Liberty Financial, which allowed retail investors to trade WLFI tokens, followed by transactions like Eric Trump’s American Bitcoin, which entered the stock market in September via mergers—all rapidly created a digital asset pool linked to Trump.

Each asset launch boosted prices temporarily, but these jumps were short-lived. By year’s end, Trump Meme coins had fallen over 80% from January highs, Melania Meme coins nearly 99%, and American Bitcoin shares declined about 80% since their September IPO. Political policies may have driven short-term gains, but they offered no long-term protection. These assets remained tied to the crypto cycle: rising prices → leveraged capital inflows → illiquidity. Bitcoin, the industry’s storyteller, lost its annual gains compared to October highs.

“Warning signals” risk: When Burry hints at the AI model curtain

In November, Scion Asset Management disclosed holdings of put options for Nvidia and Palantir Technologies, sparking a buzz in the AI market. Michael Burry, famous for predicting the “prime mortgage crisis,” was not just an investor but became a “market prophet.” His trades revealed a deep hypothesis: Nvidia put options were 47% below current prices, and Palantir’s were 76% below.

Uncertainty persisted: limited disclosure requirements made it impossible to determine whether these puts were part of more complex trades or whether Burry had reduced his positions after disclosures. Nonetheless, market skepticism about “overvalued AI giants with huge costs” had been building for a long time—like dry fuel. Burry’s disclosures seemed to ignite that fuel.

Following Burry’s announcement, Nvidia plummeted sharply, and Palantir also declined. Although these assets recovered somewhat, a climate of concern had already been created. This event revealed underlying doubts in a market “dominated by a few AI stocks, with massive passive fund inflows and low volatility.” Whether this was a “far-sighted bet” or “reckless overreach,” it confirmed a pattern: when confidence wavers, even the strongest market stories can turn quickly.

Defense stocks: a successful rebound after policy crises

A shift toward political defense, driven by Trump’s correct plans to cut Ukraine’s military spending, spurred widespread military expenditure across Europe. European defense stocks surged: Rheinmetall of Germany rose nearly 150% since the start of the year, and Italy’s Leonardo SpA increased over 90%.

Previously, many fund managers avoided defense sectors due to ESG principles, but now they have shifted priorities. Some redefined their investment scope. This enthusiasm also spread to the credit markets: banks issued “European defense bonds” similar to green bonds but specifically allocated for arms manufacturers.

This change marked a significant shift: “defense” moved from a “reputational burden” to a “public good,” reaffirming a core principle. When geopolitics shifts, capital flows often lead the way ahead of ideological change.

Hedge assets or safe havens: Changing roles of “safe assets”

Massive debt burdens in leading economies like the US, France, and Japan, combined with political unwillingness to address debt issues, led some investors to turn to “devaluation-resistant assets” such as gold and digital assets in 2025, as interest in government bonds and the dollar waned.

This strategy, called “buying on devaluation,” draws historical inspiration: Roman rulers like Nero used “currency devaluation” to manage fiscal pressures. In October, this reached a peak amid concerns over US fiscal outlooks and the “longest government shutdown in history,” prompting investors to seek safe assets beyond the dollar. Gold and Bitcoin soared to record highs simultaneously, a rare occurrence for two assets often in competition.

Aluminum, copper, and other precious metals were affected somewhat, but their reliance levels differed. Later, Bitcoin declined overall, the dollar stabilized, and US Treasury bonds—rather than collapsing—became the best indicator. This suggests that concerns about “fiscal deterioration” may coincide with “demand for safe assets.” Gold maintained its bullish trend, setting new records, even as the inflation hedge-to-tame ratio in initial supply-side shocks remained unclear for other assets.

South Korean stock market: policy success, unrecognized governance

South Korea demonstrated an exciting stock market recovery driven by President Lee Jae-myung’s “capital market stimulation” policy. The Kospi index rose over 70% this year, aiming for 5,000 points, which many Wall Street firms, including JPMorgan Chase and Citigroup, believe could be achieved by 2026.

In this recovery, a “missing” element was notable: domestic retail investors. Despite Lee Jae-myung’s emphasis on his own retail investing background, his reform plans failed to convince local investors that “the stock market is worth it.” Foreign capital flowed in, with $33 billion entering US stocks and seeking higher-risk investments like cryptocurrencies and leveraged ETFs, while retail investors remained net sellers.

Bitcoin stalls: Chanos’s bets go awry

Every story has two sides. The clash between Jim Chanos, the weak short seller, and Michael Saylor’s Bitcoin accumulation strategy evolved into a “referendum” on the “digital currency capitalism system.”

As Bitcoin prices soared early in the year, Strategy stocks also surged. Chanos saw an opportunity: Strategy shares traded at excessive valuations relative to their Bitcoin holdings. He “shorted Strategy stocks and bought Bitcoin long-term,” announcing this strategy publicly in May. The market sharply declined afterward. Lael Brainard, opposing him, told Bloomberg TV, “I don’t think Chanos understands our model.” By July, Strategy stocks hit record highs, up 57% from the start of the year.

However, as the number of “digital asset management firms” grew rapidly and crypto token prices fell from their peaks, Strategy stocks declined, and the gap between stock and Bitcoin prices narrowed. Chanos’s bet eventually paid off: on November 7, he announced he would “exit all positions.” Since then, Strategy stocks fell 42%. This event revealed the “boom-and-bust” cycle of digital assets: confidence → rising prices → financial management → confidence erosion.

Japanese bond market: from devastation to short-selling haven

For decades, short-selling Japanese government bonds (“proper trading”) repeatedly caused investor distress. The logic was clear: Japan’s enormous debt meant higher interest rates, prompting investors to short bonds expecting yields to rise.

However, Japan’s ultra-loose monetary policy kept borrowing costs low for years, forcing short sellers to pay heavily. By 2025, the situation reversed: the “once-despised Japanese bond market” became a “source of enormous returns.” The 10-year government bond yield broke 2%, reaching multi-decade highs, and 30-year bonds rose over 1%. Bloomberg’s bond index declined 6% this year, making it the worst-performing major bond market globally.

Fund managers from firms like Schroders, Jupiter Asset Management, and RBC Blue Bay have been “shorting Japanese bonds in various ways” this year, believing that shorting opportunities could grow further.

Shadow of the bondholders: When “bondholders” become “winners”

The highest returns in lending in 2025 did not come from “betting on corporate recovery” but from “competing with other investors.” The Envision Healthcare loan under KKR’s group is a case study. After the pandemic, Envision needed more funds, but new debt issuance required “collateralized assets.”

Pimco, Golden Street Capital, and Partners Group “switched teams” to support, enabling the sale of Amsurg to Ascension Health for $4 billion. These institutions “betrayed their peers” and earned about 90% returns.

Fannie Mae and Freddie Mac: “Toxic twins” revived

Since the global financial crisis, Fannie Mae and Freddie Mac have been under US government control. The question of “when and how they will exit control” became a speculative topic. Investors like Bill Ackman held long-term shares, hoping for huge gains from “restructuring plans.”

When Trump was re-elected, markets optimistically anticipated “regaining independence.” Both companies “exploded” with meme-stock fervor. In 2025, this frenzy intensified: stock prices soared 367% ( with a 388% intraday jump). In August, IPO rumors created buzz, with market valuations exceeding $500 billion.

In November, Ackman submitted a White House briefing proposal, and even Michael Burry joined with a 6,000-word document supporting it.

Turkish wholesale trading: a crisis in minutes

After an excellent 2024, carry trade in Turkey—“low-cost borrowing, high-yield assets”—became a “popular choice” for investors. Turkish bonds yielded over 40%, and the central bank pledged to defend the lira.

On March 19, police raided Istanbul’s opposition mayor’s house, causing a massive sell-off of the lira. The central bank couldn’t stop it. By December 23, the lira depreciated 17%, making it one of the worst-performing currencies.

Bonds: the “cockroach signal” grows louder

The credit markets in 2025 were not disturbed by a single “big collapse” but by multiple “mini crises,” each revealing hidden dangers.

Saks Global restructured $2.2 billion in bonds after a single interest payment. New Fortress Energy converted bonds, losing over 50% of their value. Tricolor and First Brands failed within weeks.

Investors face questions: why invest in these companies if there’s no evidence they can repay debt? JPMorgan Chase’s Jamie Dimon warned in October, with a clear analogy: “When you see one cockroach, there are many hiding.” Such risks could become a major focus in 2026.

The past year has offered a variety of lessons: from hidden “cockroaches” in the credit markets, to the “bubbles” of digital assets, and the 367% surge of mortgage bank stocks—all indicating that the global financial markets remain volatile and fraught with hidden risks.