The fact is, rate hikes themselves aren’t an unequivocal negative for U.S. stocks or Bitcoin.

Rate hikes are driven by inflation and an overheated economy, so they aren’t entirely unexpected bad news for the market.

In fact, U.S. nominal interest rates are high, at around 4%, but inflation in the U.S. is also high, hovering around 3%.

So the U.S. real interest rate has actually been around 1% all along.

On the Chinese internet, a 5% Treasury yield has long been treated as a major negative for U.S. stocks. That’s simply because, after spending so long in an environment where Treasury yields were at 1.8%, people have lost the ability to imagine inflation. We once had a period of economic overheating too; it’s just that so much time has passed that our memories of it have grown hazy.

That’s also why new highs in U.S. stocks have only a limited positive impact on A-shares.

The reason is that the two economies are at completely different stages.

When the dominant market driver is a globally shared technology wave like AI, the Chinese and U.S. markets are highly correlated.

But if markets start pricing in the underlying realities of their respective economies, the Chinese and U.S. markets will move in starkly opposite directions.