Bitcoin, the world's largest crypto asset by market capitalization, flirted at the $42,000 price level as it rebounded above $41,000 on Wednesday morning after the Financial Accounting Standards Board (FASB) officially adopted the fair value accounting for cryptocurrencies.
Bitcoin traded in the green zone on Wednesday morning ET at $41,903.99 showing a 1.41% increase in the past 24 hours and a 5.1% loss over the last seven days.
The king of crypto had a "round trip" week, according to market intelligence platform Glassnode, who described the crypto asset's journey of skyrocketing to a new yearly high of $44,600 before sharply nosediving to $40,200 over the weekend.
#Bitcoin performed a round-trip this week, rallying to new yearly highs before selling off back towards its weekly open. After such a powerful 2023 thus far, the rally seems to have met resistance, with several indicators suggesting a degree of near-term exhaustion.
— glassnode (@glassnode) December 12, 2023
Discover… pic.twitter.com/KSnJI3x8Ch
The uptrend that propelled Bitcoin to achieve a new yearly high was instigated by two price rallies of more than 5%. However, the subsequent selloff was equally forceful, with traders rushing to capitalize on the substantial gains BTC had accumulated over the preceding weeks.
Bitcoin's value plummeted by over $2,500, marking the third-largest downturn for the cryptocurrency in 2023.
Nevertheless, Bitcoin witnessed a 2.26% increase, rising from approximately $40,979.57 at 8:00 a.m. ET to $41,903.99 by 11:40 a.m. ET on Wednesday.
During this period, news emerged that Bitcoin, along with cryptocurrencies in general, would be assessed at fair value under new FASB rules set to take effect for fiscal years after Dec. 15, 2024.
The FASB, a non-governmental standard-setting board overseen by the SEC, had previously proposed a fair-value approach in March. In September, they granted staff permission to draft the final version of the new accounting standard, scheduled to be implemented after Dec. 15, 2024
BREAKING: 🇺🇸 #Bitcoin to be recorded at fair value under new FASB rules issued today - Bloomberg
— Bitcoin Archive (@BTC_Archive) December 13, 2023
This is HUGE! ‼️
Previously companies could only value their bitcoin at the lowest price since they bought it, which meant they would have to record losses, but not the gains when… pic.twitter.com/E94kS1Slrb
What does this mean?
With the recent adoption of accounting rules, crypto companies and even private institutions holding crypto assets can now record their tokens at fair value, with changes in fair value recorded in net income.
Fair value is a measurement technique that reflects the most current value of assets.
The previous accounting practice only permitted companies to record the lows, a point of contention for many businesses holding Bitcoin. They found the practice one-sided given the high volatility of crypto assets, whose prices can fluctuate dramatically.
Under the former accounting method, companies often had to devalue their crypto assets, directly impacting their earnings.
As of 12:16 p.m. ET on Wednesday, Bitcoin was trading in the green zone at $42,064.66, with a 24-hour trading volume down by 23.30% at $23,323,832,746.
Bitcoin's most recent price action represents a 1.82% increase in the past 24 hours and a 3.9% loss over the last seven days.
According to data from CoinMarketCap, Bitcoin's circulating supply stands at 19,568,900 BTC, and its value has seen a continuous spike of 1.85%, resulting in a $822,468,935,911 market cap.
