Eleven Wild Trades of the 2024 Global Market: From Crypto to Spanish Bonds, Stunning Returns

Eleven Wild Trades of the 2024 Global Market: From Crypto to Spanish Bonds, Stunning Returns2024, a year filled with shocks and surprises, offered global markets equal opportunities for success and failure. Leveraged trades soared at one point in August, Wall Streets gamble on Trump paid off, and sophisticated hedge fund strategies were pummeled

Eleven Wild Trades of the 2024 Global Market: From Crypto to Spanish Bonds, Stunning Returns

2024, a year filled with shocks and surprises, offered global markets equal opportunities for success and failure. Leveraged trades soared at one point in August, Wall Streets gamble on Trump paid off, and sophisticated hedge fund strategies were pummeled. Investors who stuck to simple strategies whether holding cash or investing in tech proved remarkably astute. Here are eleven notable wild trades from 2024, reflecting the market's volatility and the complex interplay of opportunity and risk.

1. Cryptocurrencies To the Moon, and Beyond

2024 witnessed Wall Street and a soon-to-be-returned Trump administration fostering a booming crypto investment ecosystem. While Bitcoin had already staged a remarkable comeback in 2023, the January 2024 approval of a spot Bitcoin exchange-traded fund (ETF) in the US further fueled its rise. The real catalyst for the crypto market, however, was Trumps November presidential victory, sparking a record-breaking rally that pushed Bitcoin prices above $100,000. Over $100 billion flowed into Bitcoin ETFs in the process. Numerous altcoins experienced explosive growth simultaneously.

Trump, during his campaign, promised to make the US the center of the crypto industry and mentioned establishing a Bitcoin strategic reserve. Post-election, he announced the appointment of crypto-friendly Paul Atkins as the next SEC chairman, replacing incumbent Gary Gensler, viewed as the "crypto's enemy number one."

Among the most popular and controversial trades in this recent surge was betting on the volatility of MicroStrategy (MSTR.US) stock. Having bought and held Bitcoin since 2020, MicroStrategy has become one of the largest holders of the cryptocurrency, enhancing its stocks appeal, which often moves in tandem with crypto performance. As a significant Bitcoin buyer, MicroStrategys stock price has soared nearly 480% this year.

In late October, MicroStrategy announced a plan, dubbed 21/21, to raise $42 billion over the next three years $21 billion each through equity and debt to buy more Bitcoin. Analysts believe MicroStrategy's decision to buy Bitcoin to protect the value of its reserves is a key driver of its enhanced stock appeal.

However, the risk for MicroStrategy lies in a potential reversal of the year-long massive crypto rally, where leveraged bets on its value could severely impact its owners. Indeed, prominent short-seller Citron Research labeled MicroStrategy overheated in late November. Citron Research analyst Andrew Left stated on X (formerly Twitter) that MicroStrategy had essentially become a Bitcoin investment fund and initiated a short position against the company.

With the launch of Bitcoin ETFs, investors can directly invest in Bitcoin funds without needing MicroStrategy stock as a proxy. Citron Research pointed to MicroStrategys massive Bitcoin purchases, even financing them through debt issuance, under the leadership of co-founder and chairman Michael Saylor. Saylor leveraged capital markets to finance the Bitcoin craze, driving MicroStrategy's stock surge this year; however, Citron Research argued this resembled a corporate finance version of an infinite money glitch in a video game profitable, addictive, and likely unsustainable.

Prestoresearch analyst Min Jung highlighted potential risks in MicroStrategys reliance on Bitcoin to fulfill its financial needs. He stated: Currently, a favorable Bitcoin price trend allows MicroStrategy to maintain a positive feedback loop rising MicroStrategy stock price enables increased financing, funding further Bitcoin purchases, thereby pushing up Bitcoins price and the companys stock value. While this strategy is effective during a bull market, its sustainability largely relies on Bitcoins continued appreciation.

2. ETFs Speculation Runs Rampant

In a year where a hot US stock market and cryptocurrencies fueled wild adventures, ETFs were a go-to for short-term traders. Wall Street capitalized on the publics appetite for speculative bets, launching a range of derivatives-driven wagers, from mega-ETFs aiming to deliver double the returns of Bitcoin to income-generating products shorting some of the most well-known US corporations.

Products allowing investors to amplify bets on the worlds most popular stocks thrived, with investors pouring a record $6.5 billion into single-stock ETFs. These instruments only track a single company but use derivatives to magnify bullish or bearish bets. A major winner in this category was a GraniteShares fund (ticker: NVDL) that delivered double the daily returns of market giant Nvidia (NVDA.US). Its assets surged to a peak of $6.7 billion in late November, with returns exceeding 350% for the year. Funds tracking MicroStrategy, Tesla (TSLA.US), and Coinbase (COIN.US) followed similar paths.

US ETF inflows also reached record levels this year, with Trumps presidential victory emboldening already-bold investors to double down. While funds tracking the S&P 500 absorbed the most money, one of the years most notable newcomers BlackRocks Bitcoin ETF was also among the most successful, ranking third in inflows this year.

3. Equities A Market Education

Short-term traders may have made a killing on the speculative edge, but in the broader US equity market, it was a real struggle. In the first half of the year, retail investors piled into so-called meme stocks, only to watch them settle back into the broader market after unwarranted surges. In the second half, retail investors dumped financial firms, which subsequently rode the Trump rally wave, becoming the biggest winners in the S&P 500 from July to November. Like many investors during Augusts brief market crash, retail investors panicked and sold some of their hottest holdings, including Nvidia and Tesla. This proved painful. Tesla's stock price, for instance, has nearly doubled since.

According to JPMorgan quantitative and derivatives strategist Emma Wu and colleagues, such misplaced bets resulted in retail investor returns of just 9.8% this year, the second-weakest performance for the index in any year since 2015 that saw positive returns.

4. Argentina A Stunning Surge

Last year, ahead of the Argentine presidential election, long-suffering investors were heading for the exits. With the economy struggling under triple-digit inflation and complex currency controls, Argentine sovereign dollar bonds were trading below 30% of face value. The surprise primary win by outsider Javier Milei exacerbated fears. The radical libertarian promised to dollarize the economy and shut down the central bank entirely.

By the time he won the election in November, however, investors had already bought in. Now, in his first year in office, Mileis shock therapy, including severe fiscal tightening to balance the budget and curb inflation, appears to be working, boosting confidence among voters and investors in the economy's trajectory. According to media compiled data, Argentine bonds were the top performers among emerging markets this year, surging 104%. Firms that bought these bonds throughout 2024 such as Neuberger Berman, Grantham Mayo Van Otterloo & Co., and Lazard Asset Management Ltd. reaped enormous gains.

We essentially made a judgment that Milei could deliver change, said Gorky Urquieta, a portfolio manager of emerging market debt at Neuberger. However, the 2024 rally is unlikely to be replicated anytime soon, with many issues remaining unresolved. Milei has yet to dismantle currency controls, foreign investment has declined, and the country is negotiating with the International Monetary Fund (IMF) over significantly increased debt payments in 2025 and 2026.

5. US Treasuries Cash is King of Bonds

Fixed-income investors reaped huge and easy returns by following a strategy that didn't involve trading at all: parking money in risk-free short-term US government debt essentially cash to outperform US government bonds. Through December 18th, US Treasuries averaged 0.7% returns this year while short-term bills averaged 5.1%. This marks the fourth consecutive year that bonds underperformed cash, a record since Bloomberg began compiling short-term Treasury bill return data in 1991. Over the past four years, short-term bills returned a total of 12%, while government bonds lost 10%.

US money market funds which hold cash-like instruments such as short-term Treasury bills and commercial paper grew by more than $800 billion this year. With the influx of investors, money market fund sizes swelled to $7 trillion for the first time. Hoarders included Warren Buffetts Berkshire Hathaway, which more than doubled its short-term Treasury holdings this year to nearly $300 billion as of the third quarter.

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