Amazing Dollar Value
Central banks may be buying gold at a record-setting pace — but El Salvador is still busy stacking sats.
While gold has reached new highs, Nayib Bukele’s government is gaining an advantage by dollar cost averaging the price of bitcoin.
Bukele could not have chosen a more opportune time to begin buying on a regular basis: Less than a weeks after FTX declared bankruptcy.
Bitcoin’s value had dropped by a fifth in the wake of the Sam Bankman Fried fiasco, going from more than $21,000 down to less than $17,000. This brought its losses for this year to over 65%. Bukele then decided to buy bitcoins every day.
El Salvador already had thousands of bitcoins before the FTX crash. The first bitcoin purchases took place in September of 2021. A few days later, a June law made it legal to use Bitcoin.
The posts in Bukele’s timeline are shown by large plus symbols (colored) on the graph below.
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 post that celebrated buying 85 BTC at $19,000 each.
If we look at the bitcoin price around the time Bukele tweeted, El Salvador could have spent up to $105.11 Million on the initial 2,381 BTC. This would give an average of $44,145.
Bitcoin trades at $58,460. The same amount of money would then be worth over $139.33 millions, which is a paper gain of more than 32%.
Then, things get murkier and then much more clear (and onchain). Bukele first revealed the official bitcoin wallet back in March, after El Salvador consolidated its Bitcoin treasury.
Bukele’s DCA announcement at cycle bottom was 482 day before March consolidate. El Salvador would have been better off buying 482 BTC at $14.84 Million, or an average of $30,800.
This same purchase would bring in nearly $28,2 million. The government is ahead of the game by 90 percent.
El Salvador’s bitcoin wallet, on the other hand, contained almost twice as many bitcoins than anticipated. According to Bukele’s tweets, the government’s bitcoin wallet should have held 2,863 BTC.
When you move bitcoin from a “cold wallet in a physical vault within our national territory,” El Salvador’s bitcoin address contained 5,689.7 BTC.
The difference seems to have never been addressed. Bukele posted around the same period to state that government earned revenue through its passport and mining programs, currency exchanges, and government services.
El Salvador continues to buy bitcoin. The onchain records show that new bitcoins are being deposited into cold storage every single day.
Although we cannot see exactly at what price El Salvador is buying its bitcoin daily, we are able to observe the Bitcoin being purchased and sent into the cold wallet. Since we first learned the address, there have been 173 BTCs sent to the cold storage wallet.
El Salvador purchased 3,035 BTC worth $131.02 Million since September 20, 21 at an average cost of $43,169.
El Salvador has now accumulated over $46.38 Million in bitcoin purchases, or a 35% increase.
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.
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