Boosted by a pro-cryptocurrency Trump administration, digital coins spent most of last year soaring to new heights. Bitcoin, the world’s most popular digital currency, skyrocketed from below $70,000 before the 2024 election to above $126,000 in October, an all-time high.
But this year, amid broader geopolitical turbulence, economic uncertainty and growing pessimism around alternative investments, crypto has been in a nosedive, falling to a recent low below $64,000 — wiping out its entire run up from Trump’s second term. Other popular cryptos, including Ethereum, have also been plunging, and some analysts have been warning much steeper drops could be coming.
“The crypto bubble is imploding,” Mike McGlone, a senior strategist at Bloomberg Intelligence, wrote recently on LinkedIn.
Early Monday, Bitcoin posted something of a rebound, pushing back near $70,000, although the digital coin was still off more than 20% year-to-date.
Business Briefing
Become a business insider with the latest news.
SIGN UP
Or with:
By signing up, you agree to our Terms of Service and Privacy Policy.
The recent tumble means Texas taxpayers are also in the red. Last year, as part of a broader, years-long push to transform the state into a “crypto capital,” Gov. Greg Abbott signed a high-profile bill establishing a “Strategic Bitcoin Reserve” — essentially a new state investment fund, controlled by the Texas Comptroller’s office and funded with public dollars, that would buy and potentially sell crypto.
In late November, the office made the fund’s first first purchase, buying around $5 million of a Bitcoin ETF, or exchange-traded fund. On December 15, the state made another $5 million purchase of the same ETF, the Comptroller’s office recently told The Dallas Morning News.
Advertisement
Texas made its first purchase when Bitcoin was trading at around $91,000, and the second when it was trading around $87,000. The purchase prices mean that as of early Monday the state’s $10 million cumulative investment was valued around $7.8 million.
Late last month, when Bitcoin was trading even lower, a representative for the Comptroller’s office disclosed the details of the state’s most recent purchase in an email to The News but did not respond to multiple requests for comment on the recent Bitcoin price drops, or confirm the holding’s current valuation, which then had dipped to around $7.5 million.
Waiting for the balloon to ‘pop’
In a statement sent to The News, Giovanni Capriglione, the outgoing state representative (R-Southlake) who sponsored last year’s strategic reserve legislation in the Texas House and recently took over as president of the Texas Blockchain Council, an industry group that pushed for it, emphasized a longer-term view.
“The purpose of Texas’ Strategic Bitcoin Reserve isn’t designed to go after short-term gains,” he said.
Advertisement
“This investment is a long-term investment over a much broader scope. It’s a hedge against inflation, diversifies the state’s overall investment portfolio, and positions the state as a leader in the emerging world of digital assets.”
State sen. Charles Schwertner (R-Georgetown), the author of the legislation, did not respond to requests for comment left with his office by The News.
Crypto’s advocates claim that future upswings will bring the state’s investment back in the green. Yet for critics, this year’s tumble has only added to a conviction that the state should never have gotten involved with the notoriously volatile asset class in the first place.
“Is it too early to say I told you so?” Ed Hirs, an energy economist at the University of Houston and prominent cryptocurrency critic, said late last month. “It begs all the usual questions: Who’s going to stand up and take responsibility for this loss and misuse of state funds?”
Advertisement
Hirs insisted that the state should unwind its investment and abandon its crypto push.
“It has always been a fraud,” he said. “The only question is, ‘When is the balloon going to pop?'”
Calls for transparency
Some elected representatives are in fact sounding alarm bells. Earlier in February, when Bitcoin dipped to around $65,000, state Rep. Mihaela Plesa (D-Plano) highlighted the public investment’s plunge on social media, promising to provide additional updates.
She also listed several items the state could have instead paid for with $1.2 million, or roughly the amount the state was down on its first $5 million purchase. At the time Plesa, like the general public, was unaware of the second $5 million purchase in December.
Advertisement
The list included salaries and benefits for 15-18 starting teachers for a year, mobile health clinics, 10-12 entry level firefighter or paramedic salaries for a year and property tax relief for hundreds of homeowners.
“Texas should treat public funds with the same discipline that families expect [of] their own budgets,” Plesa said in an interview. “And transparency is really important, right?”
Plesa, who was one of 25 state representatives to vote against the Senate bill’s final pass through the House, said she isn’t “anti-crypto.”
But last year, she said, as the bill was advancing, she became concerned about the potential public investment’s volatility; now, after that investment has shed value, she was advocating for more guardrails and reporting requirements.
Advertisement
“I guess take a [page out of the] book out of the financial conservatives, right?” she said. “The responsibility of government isn’t to chase the next hot asset. It’s to safeguard public resources and deliver dependable results for our taxpayers.”
Yet the strategic reserve’s champions have, in effect, often argued the opposite — that in addition to serving as a symbolic welcome mat from Texas to the crypto industry, the aggressive public investment was actually a responsible strategy to grow public dollars.
“Texas cannot expect to put its money in a one-percent savings account and keep up with inflation,” Schwertner said in a statement last year. “We need to be forward thinking as individuals are forward thinking when it comes to financial assets.”
In any case, Texas’ crypto fund will likely not be making more purchases in the near term. Legislators appropriated $10 million for the fund last year, and would have to appropriate more to enable the state to pour more money in.
Advertisement
The investment falls under the purview of the comptroller’s office, which is in the process of contracting “a cryptocurrency custodian” to manage it, a representative told The News.
Read more on The Dallas Morning News
