The global financial market in 2024 showed a unique trend unlike previous years, including Bitcoin's historic breakthrough of its all-time high, explosive growth in the ETF market, Argentina's dramatic economic recovery, Japan's major shift in interest rate policy, and China's bond market concentration phenomenon. In particular, the growth of the cryptocurrency and ETF markets changed the landscape of traditional financial markets and presented a new investment paradigm.
Bitcoin Surge
The most notable investment asset this year was undoubtedly Bitcoin. Starting with the approval of the Bitcoin Exchange-Traded Fund (ETF) in January, Bitcoin began its upward trend and continued its strong performance by surpassing $100,000 after Trump's election victory in November. Especially significant was Trump's shift from a Bitcoin skeptic to a supporter, promising to make the United States the center of the cryptocurrency industry, which acted as a powerful momentum for the market. Furthermore, the market gained more vitality when Hold Ekins, who is pro-cryptocurrency, was appointed as the successor to Gary Gensler, the Securities and Exchange Commission (SEC) chairman who was hostile to cryptocurrencies.
The Bitcoin craze also influenced corporate actions. MicroStrategy, a business software company, has transformed into a de facto Bitcoin investment company by purchasing large amounts of Bitcoin since 2020. The value of Bitcoin currently held exceeds $40 billion, and the company's stock price has surged more than fivefold. Despite quarterly revenues falling short of $500 million, an unusual phenomenon occurred where the market capitalization exceeded $90 billion.
Explosive Growth of ETFs
The ETF market also reached a historic turning point. Approximately $15 trillion flowed into the global ETF market, and Wall Street released a variety of innovative products. Derivative products tailored to investors' demands appeared, ranging from products offering twice the returns of Bitcoin to income-generating products that short U.S. companies. Notably, GraniteShares' fund, which tracks twice the price increase of Nvidia shares, held assets of $6.7 billion as of late November and recorded an astonishing return of over 350%.
Argentina's Revival
Argentina, led by President Milei, known as the "Trump of South America," showed a dramatic economic recovery. The brutal inflation rate, which was 130-140% annually at the time of his inauguration, dropped significantly, and in January, the country achieved its first monthly fiscal surplus in 12 years. The price of long-term government bonds, previously considered non-performing, rose about threefold, and the Merval Index surged nearly 140% compared to the beginning of the year, attracting global investors' attention. However, side effects such as consumption contraction and rising unemployment due to stringent austerity measures also appeared, raising concerns about a potential economic recession.
Aftermath of Yen Carry Trade
Japan shocked the global financial market by shifting from its decades-long ultra-low interest rate policy. After the interest rate hike, the Nikkei index plummeted consecutively in early August, causing a loss of $6.4 trillion in market capitalization over three weeks in global stock markets. This was due to market fears over the unwinding of the yen carry trade, which involves borrowing low-interest yen to invest in high-yield currency assets like the Mexican peso or high-return assets. Japan's interest rate hike shook the foundation of this investment strategy.
China's Stagnation
China experienced a pronounced fund concentration in the bond market amid slowing economic growth and concerns over the U.S.-China trade war. The 10-year government bond yield fell below 2%, and for the first time ever, the 30-year government bond yield was inverted by Japan's, an unprecedented event. The deepening economic downturn caused by real estate stagnation and deflation led to a surge in demand for safe assets like bonds. This indicates that despite the Chinese government's willingness to stimulate the economy, the market views China's economic future pessimistically.
2025: A Year of Uncertainty
The global financial market in 2025 is expected to be influenced mainly by policy changes from the Trump administration and the Federal Reserve's interest rate cut adjustments. While a global slowdown in growth is anticipated in the first half of the year, the market is likely to move according to the economic conditions of the United States and China in the second half. Particularly, the intensification of the U.S.-China trade conflict due to Trump's tariff-centric approach is considered the greatest uncertainty factor for the global market. In this situation, countries are expected to seek practical benefits amid the U.S.-China conflict, which could serve as a starting point for the reorganization of the new global economic order.
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