Defense, gold, Korean stocks, and Japan’s bond market all broke records in 2025

2025 was packed with high-stakes bets that turned fast and often without warning, forcing traders from Tokyo to New York to watch the most extreme markets swing + extreme gains in history.

We saw mortgage giants behaved like meme stocks, and a standard carry trade collapsed instantly.

Trump-linked crypto trades collapsed after big launches

Crypto traders jumped on anything with the Trump name. Donald Trump pushed crypto hard once he retook the presidency. He placed allies in top regulatory roles and made digital coins part of his economic message.

Hours before being sworn in, he launched his own memecoin and posted it online. Melania Trump followed with her own token. Later, World Liberty Financial, tied to the Trump family, released the WLFI token for public trading. In September, Eric Trump launched American Bitcoin, a crypto miner that listed via merger.

Every launch started with a rally. Every single one collapsed. As of December 23, Trump’s token had lost over 80% from its peak. Melania’s dropped nearly 99%, based on CoinGecko numbers. American Bitcoin sank 80% from its September high. The excitement didn’t hold. Bitcoin itself is closing the year in the red after falling from October highs.

Scion Asset Management filed paperwork on November 3 showing it held put options against Nvidia and Palantir. Michael Burry, known from The Big Short, was behind the trade. He targeted two companies at the heart of the AI-driven rally. Nvidia’s strike price was 47% under its market value. Palantir’s was 76% under.

The filing only showed the portfolio as of September 30. It’s not clear if Burry still held the puts, or if it was part of a bigger plan. But AI investors had been nervous already. Burry’s move added fuel. Nvidia fell. So did Palantir. Nasdaq dropped with them. Later, they rebounded.

Burry shared on X that he paid $1.84 for Palantir puts. Those contracts surged up to 101% in under three weeks. The trade put a spotlight on how much money had piled into just a few AI names. Even without full details, it rattled the tech-heavy market.

Defense, gold, Korean stocks, and Japan’s bond market all broke records

Trump’s choice to cut U.S. funding for Ukraine pushed European countries to act fast. Rheinmetall AG in Germany gained 150% by December. Leonardo SpA in Italy rose more than 90%. Defense stocks became hot again.

Pierre Alexis Dumont, chief investment officer at Sycomore Asset Management, said, “We had taken defense out of our ESG funds until the beginning of this year. There was a change of paradigm.” Dumont said they were now investing in defensive weapons.

The rally reached across industries — goggles, chemicals, even printers. A Bloomberg basket of European defense stocks jumped 70% for the year. Firms with loose ties to defense got new credit offers. Banks created “European Defence Bonds,” which were like green bonds but aimed at weapons makers. Defense spending became politically acceptable again.

In October, another wave hit. The U.S. entered its longest government shutdown. Debt worries soared. Investors ran from the dollar and jumped into crypto and gold. Both hit record highs that month. The trade got nicknamed the “debasement trade.” Traders believed currencies were losing value, and they looked for shelter.

But it didn’t last. Bitcoin fell again. The dollar regained ground. Treasuries turned out to be one of the year’s best performers. Gold stayed strong. Other metals like copper, aluminum, and silver jumped too, but not just from inflation fears. Trump’s tariffs and global demand shifts helped drive prices up. Gold kept climbing to new highs, even as crypto cooled off.

South Korea’s stock market also broke expectations. President Lee Jae Myung had a target: get the KOSPI index to 5000. By December 22, it was up more than 70% for the year. Wall Street started to agree the goal could happen in 2026. The global AI wave brought money into Korean equities. JPMorgan and Citigroup both backed the possibility.

But Korean retail investors weren’t convinced. Lee, a former retail investor himself, couldn’t win them over. They sold Korean stocks and sent $33 billion into U.S. assets. Some bought crypto. Others bought risky exchange-traded funds. That outflow weakened the won. The rally looked good on paper. But inside Korea, faith was still missing.

Jim Chanos and Michael Saylor went head-to-head in a public clash. Chanos shorted Strategy Inc., a company loaded with Bitcoin. He said its value didn’t match its crypto holdings.

In May, he went long on Bitcoin and short on Strategy. Saylor fired back in June on Bloomberg TV, saying, “I don’t think he understands what our business model is.” Chanos clapped back on X, calling Saylor’s comments “complete financial gibberish.”

Strategy shares peaked in July with a 57% year-to-date gain. But then Bitcoin fell. New digital asset treasury firms crowded the space. Strategy dropped. From May to November 7, when Chanos said he closed the trade, shares had plunged 42%. The premium collapsed. The bet worked.

Japan finally saw its “widowmaker” trade pay off. For years, traders shorted Japanese government bonds expecting yields to rise. It never worked. Until now. In 2025, Japan hiked rates.

Prime Minister Sanae Takaichi approved major spending. The 10-year JGB yield passed 2%. The 30-year yield reached an all-time high. A Bloomberg index tracking JGBs dropped over 6%, making Japan the worst-performing bond market this year.

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