Nayib Bukele is one of those governors who for one reason or another appears on the front pages of the newspapers. One of the most talked-about bets of the president of El Salvador is undoubtedly his speech in favour of Bitcoin and blockchain technology as an alternative for the economy.
A couple of years ago, mountains of criticism were brewing in social networks against this president due to the use of public funds to buy and maintain Bitcoins, now with a price over 60k it seems that those people who doubted Bukele's strategy and Bitcoin had to change their speeches or keep silent.
Analysis of El Salvador's BTC Positions:
To analyse these positions, in a particular way I divided it into two stages in whose buying rounds vary in strategy and timing. It should be borne in mind that one of the great recommendations in finance is not to place 100% of the capital in a single position or a single purchase order, in that case purchases with an average price have to be the most widely used, especially in the case of Bitcoin.
First Stage:
In the first stage it can be seen that Bukele's strategizing may seem rushed, however, this is not confirmed by the price until months later so at that time it may have been a viable idea in the investors' thinking, this stage of buying occurred at the time of the most promising bull market of buying many, the one where investors are afraid of being left out and decide to apply purchases at different points.
Although it may seem rushed or negative positions for a long time, Bukele's strategy teaches new investors a strategy to invest in a promising asset, even showing red numbers at times with a barrage of criticism, however, the Central American leader maintained his position, looking at the long term.
This first stage goes from the first purchase of BTC until 22 December 2021. In this time there were a total of 8 purchases in which El Salvador acquired a total of 1391 Bitcoins, using some $75,263,259 of El Salvador's coffers.
This stage is characterised by short times between purchases, reaching very high prices in the past bull cycle and taking different positions in a hurried manner, thinking that the bull cycle was not over and his positions would remain in a better relationship with the price, however, this was not the case, the price continued to fall, but Bukele kept the Bitcoins because he knew what he was doing, he knew the value of Bitcoin when many criticised him on a daily basis.
An important moment of this stage is the purchase of 420 Bitcoins, on 27 September, with an average price of 60,345.17, which made the average price of this first stage very high, even though there were purchases even in 48k, the average price of this first stage is approximately $54,107.30.
Second Stage
In this second stage, the leader of El Salvador uses a better strategy, the purchases are made in longer periods of time one from another, taking advantage of the lower areas of the BTC price chart, any strategy carries a risk, due to the positions with high prices opened previously, Bukele decided to buy less often and apply a strategy of daily purchase at the end of the strategy. This stage runs from 21 January 2022 to the present day.
Bukele's strategy was to buy after a significant price drop, as you can see in the graph next to the purchases made by the president, meaning that the strategy was to look for the minimum prices and if it dropped further, El Salvador simply bought more BTC.
From 21 January 2022 to 1 July 2022, El Salvador had bought 990 more Bitcoins, at an average price of $32,214.14, putting it in a more advantageous position and lowering the overall average price to just over 45k between the two stages.
Already with a more acceptable average price, the last purchases made by El Salvador, have been of one BTC a day since 18 November 2022, when the price of the world's main cryptocurrency was at the minimum price of the bearish cycle, which could mean the improvement of the overall average price until these last days that the BTC increases again to 62k.
The average price or DCA for El Salvador is $42 525.26, which is well below the price at which this write-up was published (62k), which means that El Salvador has entered a very attractive profit zone.
Overview:
El Salvador owns around 2852 Bitcoins, which meant a cost to the public coffers of $121,282,028.74, at the sale price at the time of this writing, that same amount of BTC means 179,064,787.88, which translates into a profit of $57,782,759.14 Almost a 50% profit, however, it is good to remember how difficult a road El Salvador had to travel to reach these substantial gains in its position.
From my partucilar point of view, El Salvador has not seen its best gains in BTC investment, for sure Bukele will maintain his position in this new bullish cycle, demonstrating to the whole world how feasible it is for institutions and governments to invest in Bitcoin.
Posted Using InLeo Alpha