Demand for physical dollar bills has declined as interest rates have risen. The link runs through opportunity cost: currency held as bills earns nothing, and when rates climb, alternatives that do earn become harder to pass up.
Physical cash is a zero-yield asset. A bill in circulation carries no interest, regardless of the rate environment. When rates are low, the gap between holding a bill and holding a deposit is small enough that many people accept it. When rates rise, that gap widens, and the preference shifts toward accounts and instruments that earn.
That shift has now reduced demand for physical dollars. The higher the rate, the more expensive it becomes to hold currency in its physical form, and demand for bills falls as the spread widens.
The dynamic tends to reverse when rates fall. Lower rates compress the same spread, ease the cost of holding physical cash, and typically support demand. The current environment is running the other direction, and demand for physical dollars has moved with it.