Texas is poised to be at the forefront of cryptocurrency adoptions through its ambitious legislative proposal. Lieutenant Governor Dan Patrick has an ambitious plan to set up a Bitcoin reserve for the state as part of his legislative priorities in 2025. This is a new shift at the state level in terms of cryptocurrency policy and adoption, which can transform the financial landscape of Texas.

States Race To Embrace Bitcoin Reserves

Momentum for state-level Bitcoin reserves is growing across America. A recent committee approval of a Strategic Bitcoin Reserve bill has energized the movement in Utah, following in the footsteps of Arizona, which helped to pioneer this approach. Now several other states follow close behind with similar proposals.

An AI image rendition of a bitcoin reserve vault in Texas. Image created by: Gemini Imagen 3.

Texas Builds On Crypto-Friendly Foundation

With Texas’s latest Bitcoin project, the state advances even more as a cryptocurrency hub. The state had rules in place earlier that support blockchain technology development and Bitcoin mining activities. This new reserve will be strictly guided by the state. This way, it can ensure compliance with regulations while extracting maximum benefits.

🇺🇸 TEXAS LT GOVERNOR DAN PATRICK SAYS ESTABLISHING TEXAS #BITCOIN RESERVE IS A TOP PRIORITY‼️ pic.twitter.com/G4y1ZzagI2

— The Bitcoin Conference (@TheBitcoinConf) January 29, 2025

Senate Bill 21, the BTC reserve proposal, is one of Dan Patrick’s top 40 legislative priorities. Its presence on such a renowned list indicates how digital assets are becoming essential to state financial strategy. The project may influence how other states integrate cryptocurrency.

Federal Discussions Signal Broader Changes

States are continuing their efforts, and the federal government is contemplating cryptocurrency reserves. Senator Cynthia Lummis is an important figure on the national reserve. Her plan has sparked lively arguments in Washington. The debate focuses on how cryptocurrencies are becoming more commonly accepted as a viable asset class.

Total crypto market cap at $3.5 trillion on the daily chart: TradingView.com

State-Level Innovation Drives National Policy

Joining the states seeking to draft legislation for a crypto reserve are Oklahoma and Massachusetts, with both bringing their distinct approach to the incorporation of digital assets. Divergent views at the state level could assist in establishing standards and best practices when implemented later on.

Evolution in state-level policies on cryptocurrency signifies a major shift in American mindset about finance. Traditional reserve approaches are being reappraised through digital alternatives. The Texas model, with Lieutenant Governor Dan Patrick at the helm, could be adopted by other states. Its roll-out would make it a highly watched policy within the United States.

Setting up state Bitcoin reserves is an important step in the growth of the alpha crypto as a valuable asset. States are shifting from basic rules to actively getting involved in digital assets. This change shows that people are becoming more confident in the future of cryptocurrency.

Featured image from Gemini Imagen 3, chart from TradingView

European Central Bank (ECB) President Christine Lagarde does not expect any EU country to adopt a Bitcoin reserve, reflecting strong skepticism about cryptocurrency’s role in central bank reserves.

Her remarks came in response to Czech National Bank (CNB) Governor Aleš Michl, who recently gained approval from the CNB board to explore alternative assets for the country’s reserves. 

Lagarde’s Skepticism Might Not Align with Some EU Nations

Michl has openly discussed the possibility of allocating up to 5% of the Czech Republic’s reserves to Bitcoin. However, the proposal has drawn mixed reactions from officials.

Lagarde insisted that Bitcoin does not meet the criteria required for inclusion in central bank reserves. She reinforced the ECB’s long-standing stance against cryptocurrency adoption within the EU’s monetary system.

“I love how Lagarde wants a liquid, secure & safe reserve, and then laughs at Bitcoin. She either didn’t do her homework, or as an agenda. Probably both,” wrote European crypto influencer Robin Seyr. 

While the Czech Republic is part of the EU, it does not use the euro. So, its central bank has more flexibility in financial decisions. 

The country has also shown strong pro-Bitcoin sentiment in recent months. In December, the country introduced new policies to ease crypto taxation rules. 

Meanwhile, the debate over Bitcoin reserves is not limited to the Czech Republic. Last month, former German Finance Minister Christian Lindner suggested exploring the idea. 

Also, Switzerland has initiated a push to include Bitcoin alongside gold in its national reserves. Swiss lawmakers must gather 100,000 signatures by mid-2025 for a referendum to advance the proposal.

“Let the ECB roll out their CBDC while EU nations hedge against EUR control with Bitcoin reserves in their own treasuries—breaking free from the ECB’s Fed-first, treasonous policies,” wrote Simon Dixon.

In the US, momentum for Bitcoin reserves is growing at the state level. Over 15 states have introduced bills to allocate funds for Bitcoin purchases. 

Texas has named Bitcoin reserves a top priority for 2025. Illinois and Indiana are also considering similar legislation. 

On a national level, former President Donald Trump signed an executive order to study the creation of a digital asset stockpile. Bitcoin’s potential as a reserve asset remains a topic of global discussion. 

Central banks and policymakers are weighing the risks and benefits of integrating digital assets into their financial systems.

Matt Hougan, Chief Investment Officer at Bitwise, said that President Donald Trump’s executive order could have a significant effect on Bitcoin’s (BTC) four-year cycle. 

While Hougan acknowledged that the market has not fully overcome the cycle, he expects any pullbacks to be shorter and less intense compared to previous years.

Impact of Trump’s Executive Order On Bitcoin’s Cycle

In his latest weekly memo, Hougan highlighted the President’s executive order and the Securities and Exchange Commission’s (SEC) recent pro-crypto shifts as major catalysts for Bitcoin’s mainstream adoption.

On January 23, President Trump signed an official order to establish a “national digital asset stockpile.” As a result, crypto inflows surged to $1.9 billion.

“It created a pathway for the largest Wall Street banks and investors to move aggressively into the space,” Hougan wrote.

According to Hougan, the current crypto cycle started in March 2023. This was when Grayscale secured a significant early victory in its legal battle with the SEC over a Bitcoin ETF. 

The ETFs launched in January 2024, with hundreds of billions of dollars entering the market from new investors. Nonetheless, Hougan sees the executive order as a catalyst for an even more significant transformation.

“But the full mainstreaming of crypto—the one contemplated by Trump’s executive order, where banks custody crypto alongside other assets, stablecoins are integrated broadly into the global payments ecosystem, and the largest institutions establish positions in crypto—I’m convinced will bring trillions,” the note read.

Notably, Bitcoin’s four-year cycle is a pattern driven by halving events. The price typically experiences a bearish accumulation phase. This is followed by a bull market due to reduced supply and then a bear market after the peak. This cycle repeats approximately every four years as the block reward for miners is halved.

BTC experienced downturns in 2014, 2018, and 2022. If this pattern holds, the next pullback could occur in 2026. Despite this, Hougan remained optimistic about crypto’s long-term trajectory.

“The crypto space has matured; there’s a greater variety of buyers and more value-oriented investors than ever before. I expect volatility, but I’m not sure I’d bet against crypto in 2026,” Hougan acknowledged. 

He also predicted 2025 to be a favorable year for crypto. 

“We’re on the record predicting that bitcoin’s price will double this year to above $200,000, driven by flows into ETFs and bitcoin purchases by corporations and governments,” stated the CIO. 

However, Hougan added that the forecast might be conservative. Lastly, he pointed out that the impact of Trump’s executive order and broader regulatory shifts will unfold over years rather than months. 

According to Hougan, establishing a new crypto regulatory framework will take at least a year. Moreover, Wall Street firms may require even more time to adapt.

Meanwhile, the CIO stated that leverage will build, excesses will emerge, and bad actors will surface. This may potentially lead to a sharp pullback. 

Nonetheless, Hougan believes any correction is likely to be “shorter”  and “shallower.” This is because of the crypto market’s maturity and a more diverse, value-driven investor base.