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Review the Previous Rate Hike Cycle and Bitcoin’s Price Action
In March 2022, when the Federal Reserve began raising rates, Bitcoin was still hovering around $47,000.

Then, as the pace of rate hikes kept accelerating—especially after multiple consecutive large increases—market liquidity tightened quickly, and Bitcoin entered a sustained period of adjustment.

In June 2022, Bitcoin briefly fell below $20,000;

In November 2022, with rate hikes, tighter dollar liquidity, and factors such as the FTX incident overlapping, Bitcoin further probed down to around $16,000.

From the start of the rate hikes to the end of 2022, Bitcoin went through a clear round of valuation compression.

But 2023 wasn’t the case that as soon as the Fed paused rate hikes, Bitcoin immediately kicked off a major rally.

In February, March, May, and July of 2023, the Fed continued raising rates—though the hike size gradually decreased from 75 basis points down to 25 basis points.

Meanwhile, Bitcoin gradually recovered from around $16,000, and at one point in the first half of 2023 it even returned to around $30,000.

I think the most important thing here isn’t the word “rate hikes,” but rather that the market’s expectations for future liquidity changed.

In 2022, the market was trading:

Rate hikes getting faster, with liquidity tightening continuously.

By 2023, the market started trading:

Rate hikes nearing their end, and the tightening cycle possibly entering its final stage.

So the biggest lesson I take from the previous rate-hike cycle is this:

In the early stage of rate hikes, the market often trades the tightening of liquidity first; in the later stage, the market starts to price in the end of tightening in advance.

That’s also why, although it was the same process of rate hikes, Bitcoin faced persistent pressure in 2022, while in 2023—despite continued hikes—there was a clear recovery.

What this cycle’s rally really needs to focus on isn’t whether Bitcoin will bounce after a specific rate hike is implemented, but rather:

Whether there will be further rate hikes later;

Whether the rate-hike cycle is already close to its end;

Whether U.S. Treasury yields and the U.S. dollar continue to strengthen;

Whether the market has started to reprice high interest rates for longer.

History won’t simply repeat itself, but the way capital responds to liquidity often does.

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Sun Yuchen’s latest long post to Hu Xijin, translated into plain talk—really just three points:

First: The “dignity” of the older generation—if you get the short end of the stick, don’t make a fuss; swallow it—that’s called having a big picture.
The dignity of the younger—why should I? Bring the contract; let’s settle the accounts clearly.

Second: The older generation believes in banquets, favors, and who gives whom face.
Younger people are more willing to believe in law, contracts, and algorithms.
Algorithms may be cold, but at least they don’t know who your dad is.

Third, and this is the most ruthless question: Where should a person’s wealth truly come from—“who you know and what position you sit in,” or from “what you create”?

So the best line in the whole piece is: “The greatest dignity is not having to talk about dignity.”

When a society keeps telling people to be “more magnanimous,” to “let it go,” to “give some face,” often it’s not that everyone cares too much about dignity—rather, the rules themselves aren’t dignified enough.

Of course, the darkest kind of humor is that this whole philosophy of “believing in rules, not in favors” was actually preached by Sun Yuchen.

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