- The president of El Salvador, Nayib Bukele, assured on Twitter that, as of November 17, the nation will begin to buy 1 Bitcoin (BTC) daily.
- El Salvador began buying BTC in September 2021, acquiring 550 BTC and since then has accumulated 2,381 BTC at an average price of $43,357.
- By buying 1 BTC daily at a price below $43,357 per BTC, El Salvador will reduce the average US dollar cost of its Bitcoin holdings.
More than a year ago, El Salvador made the historic decision to become the first country in the world to make Bitcoin legal tender. Particularly El Salvador began buying BTC in September 2021, acquiring 550 BTC and, since then, he has accumulated 2,381 BTC at an average price of $43,357.
This means that the country has spent an approximate of US$103.23 million on BTC, the current total value of which is US$39.3 million; which translates into a loss of $63 million dollars, which is equivalent to 0.22% of the country’s Gross Domestic Product (GDP).
These figures have led to the critical gaze of many experts considering that the Bitcoin experiment in El Salvador has been a failure. Although Bitcoin’s loss is insignificant when compared to the country’s overall debt, the policy has spooked international markets.
In fact, after the recent collapse of BTC as a result of the fall of LUNA and TerraUST, many speculated that Nayib Bukele may have regretted his decisions since he did not encourage his followers to buy and, for a while, removed his image profile in the social network with laser eyes.
However, contrary to what many thought was happening, Bukele reappeared to reaffirm his commitment to Bitcoin.
1 BTC per day ensures Bukele
With a message posted on Wednesday afternoon, Bukele announced that El Salvador will be buying one Bitcoin per day starting November 17.
Why would I do this? One reason is that You might be incorporating a strategy known as dollar cost averaging (DCA). This investment strategy involves making recurring and established purchases regardless of the price of the asset being acquired. In this way, the emotional component of decision-making is eliminated and, potentially, the average cost in dollars paid for the asset is reduced in the long term.
Basically, By buying 1 BTC daily at a price below $43,357 per BTC, El Salvador will reduce the average US dollar cost of its Bitcoin holdings and in the event of a bullish phase of the market, it could allow you higher profits.
However, one cannot know for sure where the price of Bitcoin is heading. Some analysts have estimated that BTC could fall in a range between $13,000 and $14,000 US.
Even so, the bet that Bukele is making is not aimed at the short term, but, on the contrary, the president of El Salvador is betting on the long term and even if BTC falls in the mentioned price range, it seems that Bukele will continue with his daily buying strategy.
Also, Bukele will not be the only one. Following the Tweet, Justin Sun, founder of Tron, ad that is going to imitate Bukele’s accumulation strategy.
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