Texas has become the first US state to purchase Bitcoin (BTC), scooping up $5 million worth via BlackRock’s IBIT ETF. The first-of-its-kind purchase comes amid dwindling prices for the largest cryptocurrency, with plans underway for Texas to self-custody BTC.
Months after passing a Strategic Bitcoin Reserve bill, Texas has earned its stripes as the first US state to have exposure to the largest cryptocurrency. According to an announcement by Lee Bratcher, President of the Texas Blockchain Council, the state purchased $5 million worth of Bitcoin on November 20.
Per Bratcher, the historic purchase was completed at around $87,000 per coin, representing a significant haul for the Lone Star State. However, Bratcher noted that the state’s BTC exposure is indirect, with the $5 million investment in the cryptocurrency made through BlackRock’s IBIT ETF.
Despite the initial investment in the form of ETFs, Texas plans to gain direct exposure to Bitcoin. Bratcher disclosed that the Lone Star State will eventually self-custody Bitcoin after completing key processes in compliance with extant regulations.
“Texas will eventually self-custody bitcoin, but while that RFP process takes place, this initial allocation was made with BlackRock’s IBIT ETF,” said Bratcher.
From a budget perspective, Texas allocated $10 million to accumulate BTC, with half of that amount deployed to the IBIT ETF investment. Although not expressly stated, the second tranche may be used to buy and hold BTC after approved custodians are selected.
Back in May, state senators passed a strategic Bitcoin reserve bill with Texas Governor Gregg Abbot signing it into law in June. The law authorizes the state, through the Texas Comptroller of Public Accounts, to hold Bitcoin and other large-cap cryptocurrencies as a state-managed asset. Meanwhile, Texas has emerged as a leading Bitcoin mining hub in the US, given its early embrace of the technology and cheap electricity.
Bitcoin Continues Its Descent
The purchase by Texas did little to slow Bitcoin’s decline, as the asset fell by over 2% in the last day. Bitcoin reached an intraday high of $88,457 before dropping all the way to $86,131 as macroeconomic headwinds pummelled the asset.
The largest cryptocurrency has wiped out all its yearly gains, putting the stocks of several Bitcoin treasury companies in the red. Apart from falling stock prices, Bitcoin ETFs are recording their fair share of outflows as investors take up defensive positions amid fears of an extended bear market.
In the last month, BTC has shed 23% of its market capitalization, underscored by multiple reports of heavy selling. However, reports of an incoming US Fed rate cut in December are stoking the enthusiasm of investors for an imminent reversal.
Source: https://zycrypto.com/texas-makes-historic-5-million-bitcoin-treasury-purchase-heres-all/
