18 Feb 2025

light mode

DCA Strategy of El Salvador

DCA Strategy of El Salvador

Nayib Bukele and Justin Sun decided to support the market by buying 1 BTC every day. They announced this on Twitter yesterday.

On this page

Bitcoin has been the official currency of El Salvador for a year now. Nevertheless, the country was a bit unlucky with the timing of its financial revolution: its bitcoin balance lost almost $70 million during that time due to the market crash. 

While everyone was worried that the Latin American experiment had failed, the charismatic president of El Salvador, Nayib Bukele, loudly announced his return: starting November 18th his country will buy 1 BTC each day, regardless of its price. 

Source: Twitter

Source: Twitter

This initiative was supported by the founder of the Tron Foundation, Justin Sun, who said that he would also purchase 1 BTC every day.

 Source: Twitter

Source: Twitter

An investment strategy characterized by repetitive purchases of any asset in “equal portions” at any current price is known as DCA (Dollar Cost Averaging). How can it help the market amid the collapse of FTX and another period of instability?

What is DCA?

DCA minimizes the emotional component during high market volatility. How does it work?

When you have chosen the asset, you invest only a part of your investing capital. You buy the same asset again after a certain period of time (a week, once a month, etc.). The amount you invest and the frequency of purchases should remain the same regardless of market prices. 

This strategy allows for the allocation of the available capital efficiently and smooths out the average price of the asset in the long term. In this case, you don't have to search for the best entry point.

Advantages of DCA

DCA shows the best results if applied to the assets that are characterized by a steady uptrend. There is a specialized investment DCA calculator that shows the profitability of DCA strategy under specific circumstances. 

If 3 years ago you started to invest $10 in bitcoin weekly, then your capital would not be $1570, but $3480. And if we apply the same arithmetic for Salvador's and Justin Sun’s strategies (which is buying 1 BTC each day), the result might not fit in the calculator register!

Source: dcabtc.com

Source: dcabtc.com

Dollar Cost Averaging allows investors:

  • reduce the negative effect of buying assets at an inflated price;
  • start investing without large capital;
  • assess the volatility of cryptocurrency prices and possible risks without causing harm to your nervous system and your family finances;
  • have a reserve of funds for the additional purchase of assets in case of a sharp price decline.

Disadvantages of DCA

The main disadvantage of this strategy is the delayed result. It usually takes at least three weeks for this scheme to start working. It will take a year or more to get a tangible result.

If you choose the DCA strategy you should also remember its low efficiency in a stable bull market, increased costs for commissions because of the high number of transactions, etc.

Can El Salvador’s strategy help to stabilize the market? Firstly, Bukele is trying to stabilize his portfolio, not the whole market. Secondly, we should admit that 30 BTC a month is not the volume that can affect the price.

Nevertheless, the social effect that arose after Bukele's tweet may well develop into a new wave of interest in cryptocurrencies.

The content on The Coinomist is for informational purposes only and should not be interpreted as financial advice. While we strive to provide accurate and up-to-date information, we do not guarantee the accuracy, completeness, or reliability of any content. Neither we accept liability for any errors or omissions in the information provided or for any financial losses incurred as a result of relying on this information. Actions based on this content are at your own risk. Always do your own research and consult a professional. See our Terms, Privacy Policy, and Disclaimers for more details.

Articles by this author
LIBRA Meme Coin Mystery—Is There a MELANIA Connection?

LIBRA Meme Coin Mystery—Is There a MELANIA Connection?

LIBRA’s sudden launch has left the crypto world divided. Was it just another meme coin stunt, or is there a real connection to Javier Milei? And what’s this about MELANIA? The plot thickens.

The Coinomist
Scammers Tricked Investors with a Fake Saudi Meme Coin

Scammers Tricked Investors with a Fake Saudi Meme Coin

Scammers impersonating Saudi Crown Prince Mohammed bin Salman on X claimed to launch an “official” KSA meme coin. Spoiler alert: It was a total scam.

Anton Kryshtal
Italy Moves to Rein In Crypto as EU, U.S. Rules Diverge

Italy Moves to Rein In Crypto as EU, U.S. Rules Diverge

The Bank of Italy, together with the Italian securities regulator Consob, met with industry leaders to discuss the evolving rules for digital assets.

Anton Kryshtal
HashFlare: The Story Behind the Infamous Crypto Ponzi Scheme

HashFlare: The Story Behind the Infamous Crypto Ponzi Scheme

The HashFlare cryptocurrency Ponzi scheme is coming to a close, with its founders admitting to a $577 million fraud. Let’s take a look back at how this infamous platform started and operated.

Anton Kryshtal
Weekly Analysis of BTC, ETH, and the Stock Market (Feb 10, 2025)

Weekly Analysis of BTC, ETH, and the Stock Market (Feb 10, 2025)

An overview of BTC, ETH, XAUT, and S&P500 charts, and the current cryptocurrency market dynamics.

Artem Khomenko
Weekly Analysis of BTC, ETH, and the Stock Market (Feb 3, 2025)

Weekly Analysis of BTC, ETH, and the Stock Market (Feb 3, 2025)

An overview of BTC, ETH, XAUT, and S&P500 charts, and the current cryptocurrency market dynamics.

Artem Khomenko
Weekly Analysis of BTC, ETH, and the Stock Market (Jan 27, 2025)

Weekly Analysis of BTC, ETH, and the Stock Market (Jan 27, 2025)

An overview of BTC, ETH, XAUT, and S&P500 charts, and the current cryptocurrency market dynamics.

Artem Khomenko
How to Bump a Transaction in the Bitcoin Network

How to Bump a Transaction in the Bitcoin Network

Sometimes, Bitcoin transactions can get “stuck,” especially if a low fee was set. In such cases, you might wonder: Why is my Bitcoin transaction stuck?

bitOn
Inside Cryptocurrency Farms: How Digital Coins Are Mined

Inside Cryptocurrency Farms: How Digital Coins Are Mined

Cryptocurrency farms and mining have evolved significantly since Bitcoin launched in 2009. To understand their growth, it helps to look at the broader history of resource extraction.

The Coinomist
From Bulls to Ballers — Why Celebrities Are Flocking to Crypto

From Bulls to Ballers — Why Celebrities Are Flocking to Crypto

Trump’s meme coin isn’t an outlier—it’s part of a broader trend. Back in 2021, celebrities were minting NFTs, and by 2024, they had moved on to personal token launches. The connection between fame and crypto has been growing for years, even if many failed to see it.

Vlad Vovk
Which Macroeconomic Factors Make Crypto Rise or Fall? 

Which Macroeconomic Factors Make Crypto Rise or Fall? 

It happens when you check the market and crypto prices are up or down for no obvious reason. Then you do some research and find out that there are actually reasons outside the crypto space.

Anahit Avetisyan
How Blockchain Helps Combat Disinformation

How Blockchain Helps Combat Disinformation

Fake news has become a global issue, shaping public opinion, fueling social tensions, and even influencing political decisions. With the rise of social media, the spread of misinformation has accelerated, making it increasingly difficult to regulate. However, blockchain technology offers a promising solution in the fight against fake news.

Daryna Nesterenko
Trading Psychology: How to Avoid Falling Victim to Your Own Biases

Trading Psychology: How to Avoid Falling Victim to Your Own Biases

The most successful traders aren’t always the smartest. More often, those who excel are the ones who understand psychological traps, manage their emotions, and maintain rationality under pressure.

Vlad Vovk
The Bitcoin Kid’s 2011 Prediction – How Right Was He? 

The Bitcoin Kid’s 2011 Prediction – How Right Was He? 

In May 2011, an unusual video surfaced on YouTube. A 12-year-old boy explained Bitcoin – how it works and what its future might hold.

Anahit Avetisyan
SBF’s Prosecutor Quits – What It Means for Crypto Crime

SBF’s Prosecutor Quits – What It Means for Crypto Crime

Danielle Sassoon, Acting U.S. Attorney for the Southern District of New York, has resigned, making headlines this week. And you’ve definitely heard of one of her biggest “client” names.

Anahit Avetisyan
MORE
«Mass Adoption Isn’t About Tech – It’s About Perception». Bitmedia Founder Matvii Diadkov – About RWA, Web3, And Marketing

«Mass Adoption Isn’t About Tech – It’s About Perception». Bitmedia Founder Matvii Diadkov – About RWA, Web3, And Marketing

Matvii Diadkov, founder of Bitmedia, shared with us in an exclusive interview his expert insights on Web3 adoption, impact of GameFi and community-centering tendencies in the market.

The Coinomist
“Satoshi is CIA”: Swedish crypto bro opens up about his Bitcoin journey

“Satoshi is CIA”: Swedish crypto bro opens up about his Bitcoin journey

The first crypto craze took place almost a decade ago. Overnight, many people found out about Bitcoin and its underlying technology, blockchain.

Lesia Dubenko
MORE