David Canellis

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<h2 class="wp-block-heading">Dollar-cost Awesome</h2>



Central banks may be buying gold at a record-setting <a href="https://x.com/KobeissiLetter/status/1830305336365875205">pace</a> — but El Salvador is still busy stacking sats.



And while gold is at fresh all-time highs, Nayib Bukele’s government has given itself every advantage with its strategy of dollar-cost averaging bitcoin.



Bukele couldn’t have picked a better time to start buying regularly: less than a week after FTX filed for bankruptcy.



Bitcoin had just tanked by one-fifth amid the Sam Bankman-Fried debacle, from over $21,000 to under $17,000, bringing its year-to-date losses to over 65%. It was then that Bukele <a href="https://x.com/nayibbukele/status/1593113857261965312">opted</a> to start buying bitcoin every day.



El Salvador had already acquired thousands of bitcoin in the 14 months leading up to the FTX crash. The first purchases came in September 2021, a few days before bitcoin officially became legal tender thanks to a law that was passed in June.



At least, that’s going by the posts on Bukele’s timeline (shown by the big colorful plus signs on the chart below).



<figure class="wp-block-image size-large is-resized"><img loading="lazy" decoding="async" width="1949" height="1155" src="https://blockworks-co.imgix.net/wp-content/uploads/2024/09/Screenshot-2024-09-02-at-14.08.09.png?w=1024&amp;h=1024" alt="" class="wp-image-91268" style="width:840px;height:auto" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2024/09/Screenshot-2024-09-02-at-14.08.09.png?w=1949 1949w, https://blockworks-co.imgix.net/wp-content/uploads/2024/09/Screenshot-2024-09-02-at-14.08.09.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2024/09/Screenshot-2024-09-02-at-14.08.09.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2024/09/Screenshot-2024-09-02-at-14.08.09.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2024/09/Screenshot-2024-09-02-at-14.08.09.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2024/09/Screenshot-2024-09-02-at-14.08.09.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2024/09/Screenshot-2024-09-02-at-14.08.09.png?w=440 440w, https://blockworks-co.imgix.net/wp-content/uploads/2024/09/Screenshot-2024-09-02-at-14.08.09.png?w=370 370w, https://blockworks-co.imgix.net/wp-content/uploads/2024/09/Screenshot-2024-09-02-at-14.08.09.png?w=80 80w" sizes="(max-width: 1949px) 100vw, 1949px" /><figcaption class="wp-element-caption">The symbols in red reflect the dollar-cost averaging strategy</figcaption></figure>



Bukele never really showed onchain receipts for his first set of purchases, so we don’t know at what price El Salvador was buying — except for one <a href="https://x.com/nayibbukele/status/1542672286490271744">post</a> that celebrated buying 85 BTC at $19,000 each.



But if we take the price of bitcoin around the time of Bukele’s tweets, El Salvador potentially spent $105.11 million on its initial 2,381 BTC, giving an average price of $44,145.



Bitcoin currently trades for $58,460, so the same amount would be worth $139.33 million, converting to paper gains of over 32%.



From there, it gets murkier before it gets much clearer (and onchain). Bukele only <a href="https://x.com/nayibbukele/status/1768425845163503738">disclosed</a> an official bitcoin wallet in March of this year, when El Salvador consolidated its bitcoin treasury to a single address.



There were 482 days between Bukele announcing his DCA plan at the cycle bottom and the March consolidation. So, El Salvador should’ve bought 482 BTC for $14.84 million, at an average price of $30,800.



The same haul would fetch nearly $28.2 million, putting the government ahead on those particular purchases by 90%.



One surprise, however, was that El Salvador’s bitcoin wallet contained nearly double the bitcoin than expected. The government should’ve held 2,863 BTC based purely on the buying patterns telegraphed by Bukele’s Twitter posts.



After moving bitcoin to a “cold wallet in a physical vault within our national territory,” El Salvador’s bitcoin address contained 5,689.7 BTC.



It seems as though the difference was never really addressed. Bukele did <a href="https://x.com/nayibbukele/status/1767323587071947195">post</a> around the same time to say that the government had earned bitcoin revenue from its mining and passport programs, currency conversions and government services.



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1516" height="1138" src="https://blockworks-co.imgix.net/wp-content/uploads/2024/09/Screenshot-2024-09-02-at-14.05.44.png?w=1024&amp;h=1024" alt="" class="wp-image-91270" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2024/09/Screenshot-2024-09-02-at-14.05.44.png?w=1516 1516w, https://blockworks-co.imgix.net/wp-content/uploads/2024/09/Screenshot-2024-09-02-at-14.05.44.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2024/09/Screenshot-2024-09-02-at-14.05.44.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2024/09/Screenshot-2024-09-02-at-14.05.44.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2024/09/Screenshot-2024-09-02-at-14.05.44.png?w=342 342w, https://blockworks-co.imgix.net/wp-content/uploads/2024/09/Screenshot-2024-09-02-at-14.05.44.png?w=348 348w, https://blockworks-co.imgix.net/wp-content/uploads/2024/09/Screenshot-2024-09-02-at-14.05.44.png?w=292 292w, https://blockworks-co.imgix.net/wp-content/uploads/2024/09/Screenshot-2024-09-02-at-14.05.44.png?w=80 80w" sizes="(max-width: 1516px) 100vw, 1516px" /><figcaption class="wp-element-caption">El Salvador’s bitcoin portfolio (sans the mysterious additional coins) is in blue, bitcoin is in orange, and the total bought is in the background in purple</figcaption></figure>



In any case, El Salvador is indeed still buying bitcoin. Its onchain history shows a new bitcoin coming into cold storage almost every day (sometimes there are breaks where no deposits happen, but they always come in eventually).



We still can’t see at precisely what price El Salvador buys its daily bitcoin, we can only spot the purchased bitcoin being sent to the cold storage wallet. There’s been 172 BTC sent to cold storage in the 173 days since we learned of the government’s bitcoin address.



Overall (and ignoring the extra bitcoin that showed up during Bukele’s wallet reorganization), my calculations suggest that El Salvador has bought 3,035 BTC for $131.02 million since September 2021, at an average price of $43,169.



That would put El Salvador up over 35% on its bitcoin buys to date, or $46.38 million.



Focusing just on bitcoin bought via dollar-cost averaging meanwhile returns 47.5% ($38.23 million from $25.9 million) — mostly because of how well Bukele timed the market.



Keep cooking, I say.



<h2 class="wp-block-heading">Data Center</h2>



<ul class="wp-block-list">
<li>BTC and ETH are up 1% and 2.5% on the day, respectively. (BTC: $58,635; ETH: $2,530.)</li>



<li>Both are still down around 8% in the past week, per CoinGecko.</li>



<li>HNT is the top performer of the front-page over that period with 14% gains. XMR is the only other top-100 token to rise by more than 1%.</li>



<li>Weekly DEX <a href="https://defillama.com/dexs/chains">volume</a> on TON falls 55% as Telegram CEO Pavel Durov posts $5.5 million bail.</li>



<li>Pump.fun competitor Sun Pump contributed 10% of all smart contract <a href="https://tronscan.org/#/data/rankings/contracts">calls</a> on Tron in the past week. 76% are still related to USDT.</li>
</ul>



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Bukele was right: El Salvador timed the bitcoin bottom almost perfectly

Brian Nibley

<div id="highlights-block_618d8d83ad1cc" class="highlights">
 <ul>
 <li>A sharp downturn in markets need not be feared by the dollar-cost averaging investor</li>
 <li>Investors can combine dollar-cost averaging with regular deposits into an investment account or crypto exchange which allows investors to save and invest more reliably and efficiently</li>
 </ul>
 
</div>



In the words of billionaire investor Charlie Munger: “The real money comes not in the buying or the selling, but in the waiting.”&nbsp;



A more common saying today might be that your “time in the market is more important than timing the market.” In other words, long-term investors tend to be more likely to prosper than those trying to buy low and sell high in the short or medium term.



What’s the best way to get into any market for the long term? Many might argue that dollar-cost averaging (DCA) is one of the most effective strategies for investors looking to smooth out the natural dips and rips that occur in markets. This holds even more true in markets notorious for volatility like crypto.



<h3 class="wp-block-heading">Benefits of dollar-cost averaging</h3>



There are both pros and cons to the DCA strategy. But the benefits tend to outweigh the drawbacks. Some of these benefits include things like:



Risk Reduction. A sharp downturn in markets need not be feared by the dollar-cost averaging investor. In fact, it might be welcomed, because buy orders during a correction will be more beneficial.&nbsp;



Emotional Detachment. It’s easy to get caught up in FUD during bear markets or FOMO during bull markets (especially with all the great crypto memes out there). But DCA is more of a “set it and forget it” type of process that filters out market noise. Marketing timing also becomes irrelevant.



Disciplined Saving. Investors can combine dollar-cost averaging with regular deposits into an investment account or crypto exchange. Doing so can allow investors to save and invest more reliably and efficiently.



There are other benefits as well, but these tend to stand out when it comes to crypto. <a href="https://cms.blockworks.co/top-three-tips-to-earning-interest-on-crypto/" target="_blank" rel="noreferrer noopener">Vauld</a> users are able to tap into all of these benefits through the use of Vauld’s automated investment programs.



<h3 class="wp-block-heading">Vauld’s “buy the dip” feature</h3>



One way to dollar cost average into any asset is to set recurring buys at regular intervals for a set dollar amount. But what if there were an even more effective method?



One of the big benefits of averaging in is buying more when prices dip. Over time, any DCA strategy will naturally wind up buying some dips. But Vauld’s DCA equivalent feature is the Automatic Investment Plan (AIP), which can be customized in a way that can help investors maximize their potential returns.



“The DCA product has two parameters that you can play with. One, you can dollar cost average over time, or [two], the ‘buy-the-dip’ feature, which is when you dollar cost average relative to a drop in the market,” said Darshan Bathija, Co-Founder and CEO of Vauld.



This allows investors to schedule buys not only at regular intervals, but also in accordance with market corrections. Someone trying to build a position in bitcoin (BTC) could schedule a buy order that will execute whenever BTC dips 5%, for example. This can be a lot easier than trying to navigate the order books of most traditional exchanges. 



Darshan Bathija added: “It removes the stress of trying to time the market. All you have to do is make sure you have [a] sufficient stablecoin [balance] on the platform, which is actually earning interest for you at the same time.”



Being able to automatically <a href="https://www.vauld.com/" target="_blank" rel="noreferrer noopener">buy the dip</a> helps to offset one of the main criticisms of the DCA strategy: reduced returns relative to timing a market bottom or regularly buying dips. Because bull markets tend to last longer than bear markets, investors who average in are likely to miss out on some gains.&nbsp;



“Volatility is a huge block for most people wanting to enter the crypto space,&#8221; said Darshan Bathija, CEO and Co-Founder of Vauld. &#8220;Dollar-cost averaging is the best way to start investing in crypto, and I think Vauld’s BTD feature actually benefits any person entering the crypto market.” 



All in all, the ability to earn interest on assets while averaging in and buying the dip can help maximize <a href="https://www.vauld.com/rates" target="_blank" rel="noreferrer noopener">returns</a> without trying to time the market or being concerned with FUD or FOMO.