On November 20, 2025, Texas executed the first Bitcoin purchase by a U.S. state government, allocating $5 million from public treasury funds into BlackRock’s iShares Bitcoin Trust (IBIT) at an average price of $87,000 per BTC. The transaction, confirmed by Texas Blockchain Council president Lee Bratcher on November 25, marks the operational launch of the Texas Strategic Bitcoin Reserve—a groundbreaking initiative authorized under Senate Bill 21 and signed by Governor Greg Abbott in June 2025.
This isn’t a symbolic gesture. Texas has committed a total of $10 million to the reserve, with the remaining $5 million awaiting deployment as the state finalizes infrastructure for self-custody Bitcoin holdings. The purchase occurred during Bitcoin’s steepest correction of the year—down 30% from its October ATH of $126,000—prompting Bratcher to declare Texas “bought the dip.”
The move positions the 8th largest economy in the world (Texas GDP: $2.4 trillion) as the first sub-national government globally to treat Bitcoin as a strategic reserve asset alongside gold and traditional securities. With Pennsylvania, Florida, New Hampshire, and Arizona debating similar legislation, Texas’s execution shifts the conversation from “should states hold Bitcoin?” to “when will others follow?”
The Numbers: What Texas Actually Bought
Transaction Details:
– Purchase Date: November 20, 2025
– Amount: $5 million (first tranche of $10M total allocation)
– Vehicle: BlackRock iShares Bitcoin Trust (IBIT)
– Average Price: $87,000 per BTC
– BTC Acquired: ~57.47 BTC
– Executing Entity: Texas Treasury Safekeeping Trust Company
– Authorized by: Senate Bill 21 (signed June 2025)
Portfolio Context:
Texas Treasury Safekeeping Trust Company manages ~$700 million in total assets, primarily $667 million in SPY (S&P 500 ETF) and $34 million in a Janus Henderson fund. The $5 million Bitcoin allocation represents just 0.7% of the portfolio—a pilot position sized to test infrastructure and gauge market response without meaningful balance-sheet risk.
However, the $10 million total authorization represents potential for doubling the position once self-custody frameworks are operational. If Texas scales beyond the initial allocation—a decision subject to biennial review—the state’s Bitcoin holdings could eventually rival corporate treasuries like MicroStrategy’s on a per-capita basis.
Why ETF First? The Self-Custody Roadmap
Texas’s decision to purchase IBIT rather than holding Bitcoin directly is strategic, not permanent. State Comptroller Kelly Hancock’s office described the ETF as a “placeholder” while finalizing custody infrastructure meeting legal and security standards.
The Custody Challenge:
Unlike corporations that can custody Bitcoin using third-party providers (Coinbase, Fidelity, BitGo), state governments face unique constraints:
– Fiduciary Duty: Public funds require multi-signature cold storage with insurance and audit trails exceeding private-sector standards
– Legal Framework: Texas law requires “on-chain verifiability, multi-signature security models, and regular audit protocols”
– Political Accountability: Any loss of taxpayer funds to hacking or mismanagement could derail the program permanently
The RFI Process:
In September 2025, Texas issued a Request for Information (RFI) asking industry players to “capture best practices for implementation and management” of Bitcoin custody. The deadline expired in mid-October, with responses from major custodians (Coinbase Custody, Fidelity Digital Assets, BitGo) presumably under evaluation.
The Comptroller’s office indicated a formal Request for Proposal (RFP) will follow, leading to a custody contract expected in Q1 2026. At that point, Texas will convert its IBIT holdings into spot Bitcoin under self-custody—a transition Bratcher described as moving “from ETF wrapper to sovereign asset control.”
Why This Matters:
ETF holdings subject Texas to BlackRock’s custody decisions, counterparty risk, and management fees (0.12% annually for IBIT). Self-custody eliminates intermediaries, reduces costs, and provides true ownership—critical for positioning Bitcoin as a sovereign reserve akin to gold.
Strategic Timing: “Bought the Dip” at $87K
Texas’s November 20 purchase at $87,000 per BTC occurred near the local bottom of Bitcoin’s steepest 2025 correction:
– October ATH: $126,000
– November Low: $80,553 (November 21)
– Texas Entry: $87,000 (November 20)
Lee Bratcher’s “bought the dip” commentary isn’t just marketing, it’s factually accurate. Texas entered during Bitcoin’s worst Fear & Greed Index reading since 2023 (10/100), precisely when long-term holders historically accumulate.
Strategic Opportunism or Lucky Timing?
The purchase timing suggests either:
1. Deliberate: Texas waited for volatility to secure favorable pricing
2. Coincidental: Bureaucratic timelines happened to align with a crash
Either way, the optics are powerful. By entering at $87K and riding recovery to $98K, Texas demonstrates Bitcoin’s resilience as a reserve asset rather than launching at peak hype only to suffer immediate losses.
Comparison to Other Institutional Buyers:
– MicroStrategy (Michael Saylor): Average cost basis ~$49,000 across 400K+ BTC
– El Salvador: Average cost basis ~$43,000 across 5,800 BTC
– Tesla: Sold 75% of BTC holdings in 2022 at losses; holds ~10,000 BTC
– Texas: Average cost basis $87,000 across ~57 BTC
While Texas’s entry price is higher than early corporate adopters, it’s far below the October $126K peak—positioning the state well for Q1 2026 if Bitcoin’s typical post-halving cycle continues.
Political and Symbolic Implications
The Trump Connection:
Senator Charles Schwertner, SB 21’s primary sponsor, explicitly credited President Trump’s pro-crypto pivot: “President Trump has stated unequivocally that he intends to make the United States the cryptocurrency capital of the world. His visionary leadership on Bitcoin and digital assets has paved the way for rapid American innovation, and Texas is leading the way.”
This isn’t coincidence. Trump’s May 2025 executive order establishing a federal Bitcoin Strategic Reserve Commission created political cover for state-level action. While the federal reserve remains in planning stages, Texas’s execution demonstrates state governments won’t wait for Washington’s lead.
The $4-in-a-Million Metaphor:
Critics have seized on the allocation’s small size relative to Texas’s $338 billion biennial budget, with StateScoop calculating it equivalent to someone earning $80,000 investing $4 in stocks—”the economic policy equivalent of a car dealership’s inflatable tube man.”
However, this critique misses the strategic logic: Texas is running a **pilot program**, not committing the treasury wholesale. The $10 million allocation allows testing custody infrastructure, legal frameworks, and political acceptability before potentially scaling dramatically. Corporate treasury pioneers like MicroStrategy started with modest positions before accumulating hundreds of thousands of BTC.
Ripple Effects Across States:
At least 10 U.S. states have proposed Bitcoin reserve legislation in 2025:
– Pennsylvania: HB 2481 (proposed $700M allocation)
– New Hampshire: SB 480 ($100M Bitcoin bond approved)
– Florida: HB 7007 (allowing 10% pension allocation)
– Arizona:* HB 2004 ($1B reserve proposed)
– Ohio, Wyoming, Montana, Oklahoma, South Dakota
None had executed purchases before Texas. Now that operational precedent exists, legislators in these states can point to Texas’s model rather than debating hypotheticals.
Risks and Criticisms
Volatility Concerns:
Bitcoin’s 80% drawdowns during bear markets create legitimate balance-sheet risk. A drop from $87K to $17K (matching 2022’s 82% decline) would leave Texas’s position underwater by $4 million—minor in absolute terms but politically toxic if amplified by opponents.
The state’s biennial review process provides an exit mechanism, but selling at losses would vindicate critics who called the reserve a “publicity stunt” from inception.
Regulatory Uncertainty:
While Trump’s administration supports federal Bitcoin reserves, future administrations could reverse course. States holding Bitcoin may face federal pressure to divest, particularly if crypto regulations tighten under future leadership.
Opportunity Cost:
The $10 million could have funded education, infrastructure, or traditional investments yielding predictable returns. Bitcoin’s zero yield and volatility make it a speculative allocation that must outperform alternatives to justify itself.
What This Means for Bitcoin
Demand Side:
Texas’s $5 million is negligible in a $1.9 trillion Bitcoin market cap. However, the **precedent** matters enormously. If 10 states follow Texas’s model with $100M-$1B allocations, cumulative demand could reach $5-10 billion—equivalent to 6-12 months of MicroStrategy’s buying.
More importantly, state government adoption legitimizes Bitcoin as a reserve asset category. Pension funds, sovereign wealth funds, and central banks watching from the sidelines now have proof-of-concept from a $2.4 trillion economy.
Supply Side:
Texas’s intention to self-custody removes BTC from circulation, albeit modestly. If states collectively custody 100,000+ BTC long-term, it reduces available supply and could exacerbate Bitcoin’s scarcity-driven price dynamics.
Political Capital:
Bitcoin now has bipartisan state-level support (Texas is Republican-led, but Democratic-leaning states like California have crypto-friendly factions). This political diversification makes federal crackdowns less likely—regulators hesitate to override state policy in a federalist system.
Conclusion: The First Domino Falls
Texas’s $5 million Bitcoin purchase is simultaneously insignificant and historic. In absolute terms, it’s a rounding error in the state’s budget and Bitcoin’s market cap. In strategic terms, it’s the first domino in potential state-level adoption that could see tens of billions flow into BTC over the next 2-5 years.
Governor Abbott and Senator Schwertner positioned this as “leading the way” following Trump’s crypto vision—framing Texas as the vanguard of American Bitcoin adoption. Whether other states follow depends on:
1. Texas’s political success: Can supporters spin this positively regardless of price volatility?
2. Custody execution: Will self-custody transition proceed smoothly or face setbacks?
3. Bitcoin’s performance: Will BTC validate the reserve thesis or crash spectacularly?
For Bitcoin believers, Texas’s move is validation. For skeptics, it’s a publicity stunt. For traders, it’s a signal that institutional adoption continues even during 30% drawdowns—a bullish undercurrent beneath bearish price action.
The race to $100 billion in government Bitcoin reserves has begun. Texas just fired the starting gun.
Disclaimer: The information provided in this material does not constitute advice on investment, taxation, legal, financial, accounting, or any other related services, nor does it serve as a recommendation to purchase, sell, or hold any assets. MEXC Learn offers this information for reference purposes only and does not provide investment advice. Please ensure you fully understand the risks involved and exercise caution when investing. MEXC is not responsible for users’ investment decisions.
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