Hedge funds held an estimated $2 trillion in US Treasuries in December 2025, representing nearly 7% of marketable debt, according to the Office of Financial Research. Research from the Dallas Federal Reserve shows that swap-spread strategies can expose funds to more dollar risk for a given notional amount, allowing them to reduce their Treasury positions while keeping the same risk budget. Estimated cash-futures basis exposure rose from $213 billion in January 2023 to $832 billion in September 2025, while swap-spread arbitrage exposure increased from $42 billion to $305 billion. If funds gradually reduce their Treasury purchases, pension funds, banks, households and foreign investors could take over, provided yields are sufficiently attractive, with Treasury prices falling as yields rise. A simultaneous decline in Bitcoin and Treasuries would not, however, establish causality, because sales may be triggered by liquidity needs or tighter financing rather than a broad liquidation of positions.
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