CryptoSlate
US marketable Treasury debt crossed $30.2 trillion by the end of fiscal 2025, with a $1.8 trillion deficit and the first year of interest payments exceeding $1 trillion — a figure that outpaced both defense spending and Medicare in a single budget cycle. Nearly $3 trillion of that debt matured in 2025 alone, requiring fresh buyers at exactly the moment foreign central banks and the Federal Reserve have been pulling back. The Fed's balance sheet peaked at $8.5 trillion in 2022 and has been shrinking since, leaving private markets — hedge funds, asset managers, stablecoin issuers — to absorb what sovereign demand once handled. When the 10-year yield pushed through 4.5% last week, Bitcoin broke back below $80,000.
Why it matters
The structural concern is no longer whether the US can issue more debt, but whether the marginal buyer base is stable enough to absorb it. Hedge funds running the cash-futures basis trade had notional short Treasury futures positions above $1 trillion by March 2025, with the largest funds carrying leverage above 18:1, according to Fed officials. Fed Governor Lisa Cook formally flagged the arrangement as a systemic vulnerability in November, warning that positions at that scale make the Treasury market considerably more susceptible to stress. A weak two-year note auction in late March — where primary dealers absorbed roughly twice their normal share — was the latest visible symptom. CryptoSlate's reporting documents how yield moves have repeatedly set Bitcoin's near-term ceiling, and the Fed cuts that crypto markets once treated as a tailwind are now priced out of the near-term picture entirely, with Barclays pushing its first expected cut to March 2027.
Market impact
The 30-year yield has climbed toward 5.1%, its highest level since 2007, and the 30-year fixed mortgage rate is pinned above 6% even after three consecutive Fed cuts — a clean illustration of how the long bond has decoupled from short-term policy. Tether now holds $141 billion in Treasuries, making it one of the largest non-sovereign holders of US government debt and embedding crypto-native capital directly in America's debt infrastructure.
Frequently asked questions
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How large is the US Treasury debt now?
Total marketable US Treasury debt crossed $30.2 trillion by the end of fiscal year 2025, more than double its 2018 level. The US also ran a $1.8 trillion deficit that year and paid more than $1 trillion in interest on its publicly held debt for the first time.
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What did Fed Governor Lisa Cook actually warn about?
In November 2025, Cook formally flagged leveraged funds' notional short Treasury futures positions — which had exceeded $1 trillion by March 2025 with the largest funds carrying leverage above 18:1 — as a systemic vulnerability, warning that positions at that scale make the Treasury market considerably more…
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Why are mortgage rates still above 6% if the Fed is cutting?
The 30-year fixed mortgage rate tracks the 10-year Treasury yield, not the Fed's short-term policy rate. With the 10-year refusing to fall below 4.3% through much of 2025 and into 2026, mortgage rates have stayed pinned above 6% even after three consecutive Fed cuts — a visible decoupling of the long bond from…
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How is Tether connected to the US Treasury market?
Tether's Treasury exposure reached $141 billion in 2025, making it one of the largest non-sovereign holders of US government debt. As foreign central banks and the Fed have pulled back, that stablecoin demand has helped support the short end of the market — which also means stress in stablecoins can now ripple…
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When does the market expect the next Fed rate cut?
CryptoSlate reports that Fed rate cuts have been priced out of the near-term picture entirely. Barclays has moved its first expected cut to March 2027, and futures markets are assigning meaningful odds to a rate hike before the end of the year.
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