Many people haven't realized how profound the impact of Japan's recent rate hike is.

First, it's important to understand a fact: for the past decade or so, Japan has essentially been the world's "free money ATM." Ultra-low interest rates encouraged investors to borrow yen aggressively and then invest in US stocks, emerging markets, and even high-yield assets like BTC—this strategy is called carry trade, and the scale has reached $20 trillion.

Now with the rate hike, the game rules have changed instantly. Borrowing costs have risen, the yen is appreciating, and investors are forced to sell off assets to convert back to yen and pay off debt. US stocks fall, emerging markets shake, risk assets collectively suffer, and BTC naturally can't escape either.

What's even more serious is that Japan is the largest overseas holder of US Treasuries. Capital flowing back means they might reduce their holdings of US Treasuries, directly pushing up global bond yields. Yields on US and German government bonds are both rising, and global financing costs are climbing as well.

This isn't just a simple "rate hike by Japan"—it's a chain reaction that affects the entire system.