Dollar-cost Averaging Bitcoin Would’ve Saved El Salvador $18M

Bitcoin bull Nayib Bukele, El Salvador’s millennial president, finally appears ready to employ a time-tested investment strategy: dollar-cost averaging.

Bukele, who led the charge for El Salvador to become the first nation to adopt bitcoin as a legal tender, has tweeted that El Salvador will buy one BTC each day moving forward, starting today.

The move would mark the end of a nearly five-month break amid severe bear market conditions and the downfall of Sam Bankman-Fried’s sprawling $32 billion FTX empire. 

Bukele’s last BTC purchase was on June 30, 2022, when he bought 80 BTC ($1.33 million) for $1.52 million, averaging out to $19,000 per coin, per NayibTracker.

Bitcoin’s price has been steadily falling all year, trading for $16,500 as of 9:30 am ET — 13% below Bukele’s last purchase price.

El Salvador, via Bukele’s smartphone, has overall invested $107.16 million on 2,381 BTC to date, according to BitcoinTreasuries, although the stash is currently worth just $39.4 million.

This leaves El Salvador down about 63% and nursing paper losses of almost $68 million. 

El Salvador’s bitcoin fund also contains US dollars — the nation’s other legal tender. And despite Bukele’s mostly ill-time buys, the fund has previously been in the green. 

When bitcoin was approaching all-time high last October, Bukele found himself a few million dollars ahead. He quickly pledged to siphon $4 million in profits from the fund to pay for a giant new pet hospital in capital San Salvador, which reportedly opened its doors in February. 

Bukele says he’s never sold any bitcoin.

Loading Tweet..

Dollar-cost averaging bitcoin could’ve left Bukele down less bad

Still, if Bukele had opted to dollar-cost average his bitcoin buys from the very beginning, El Salvador would be in a much better position than it is today.

Dollar-cost averaging is simply investing a fixed amount of cash at regular time intervals, regardless of market sentiment. This strategy, usually implemented by long-term investors, is pitched to offer protection from allocating capital at the top, something Bukele has been known to do with his bitcoin buys.

Back-of-the-napkin math shows Bukele:

• has spent $107.16 million on 2,381 BTC ($39.2 million) since Sept. 6, 2021,
• could’ve instead dollar-cost averaged $244,658 each day to
• receive 3,492 BTC ($57.5 million).

So, dollar-cost averaging from the start would’ve seen Bukele acquire an additional 1,111 BTC ($18.3 million), representing a bigger bitcoin stash by roughly 47%.

This would’ve saved El Salvador more than $18 million on its profit/loss statement, with Bukele only feeling $49.7 million in paper losses compared to his current $68 million. Bukele would’ve been down only 46%, instead of 63% today.

Indeed, while dollar-cost averaging the whole time would’ve helped Bukele, he would still be down on his bitcoin purchases to date — a feeling surely common among investors this year.

---

Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.

Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. Subscribe to the Forward Guidance newsletter.

Get alpha directly in your inbox with the 0xResearch newsletter — market highlights, charts, degen trade ideas, governance updates, and more.

The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.