The Bitcoin price experienced a remarkable one decline as selling pressure increased, resulting in a decline of over 4% from the annual peak of $44,500. This downturn was further exacerbated by the loss of the crucial support level at $42,000.
However, the largest cryptocurrency on the market received one significant increase from the US Financial Accounting Standards Board (FASB), which has caused a rapid 1.8% increase in the value of BTC over the past two hours. As a result, Bitcoin has successfully recovered the $42,000 support level.
FASB’s Fair Value recognition brings clarity for BTC?
In a major development for the cryptocurrency industry, the FASB has done so announced new accounting rules that require companies, including prominent entities like MicroStrategy, Tesla and Block, to measure their cryptocurrency holdings at fair value.
These rules, which come into effect in 2025, will allow companies to record the real-time highs and lows of their Bitcoin and Ethereum (ETH) assets, providing a more accurate representation of their holdings.
Under previous accounting practices, companies were only allowed to record the lows, resulting in a one-sided accounting treatment that often led to lower valuations and lower revenues for companies that own cryptocurrencies. The highly volatile nature of crypto assets has further exacerbated the problem.
The FASBs new rules are addressing these concerns by mandating the registration of cryptocurrencies at fair value, a measurement technique aimed at reflecting the most current value of these assets.
Changes in fair value will now be recorded in net income, allowing companies to more comprehensively account for fluctuations in the value of their crypto assets.
The positive news for BTC lies in the fact that the new FASB rules provide greater transparency and accuracy in assessing the true value of cryptocurrency assets. By absorbing fluctuations in fair value, companies gain a more realistic view of their assets, enabling better decision-making and financial reporting.
Bitcoin, the most widely recognized and valuable cryptocurrency, will benefit significantly from these changes. Recognition of its fair value allows companies to showcase the true value of their BTC holdings, potentially increasing investor confidence and attracting further institutional interest.
Turbulent times for the Bitcoin price
Following these recent developments, Bitcoin price has successfully recovered to previously lost levels, demonstrating increased volatility after a brief consolidation phase just below $42,000.
However, according to According to CoinGlass’ liquidation heatmap, Bitcoin’s price may face further volatility that could lead to a significant amount of liquidation of both long and short positions.
CoinGlass’s liquidation heatmap highlights substantial indications of liquidation leverage above $200 million, both above and below the current Bitcoin price.
By special care is the fat liquidation leverage below $41,000 as seen in the chart above, which, combined with the prevailing trend, could become a likely target for the Bitcoin price in the coming days.
Conversely, after BTC’s correction, additional liquidation leverage has emerged in CoinGlass’ heatmap, especially in the range of short positions at $42,000 and $43,000. This additional selling pressure has helped the Bitcoin price track.
This potential scenario suggests a potential price swing up and down before a stable continuation of downward or upward momentum occurs. The outcome remains uncertain as to which side will succumb first and which prevailing trend will shape the latter part of the year.
Featured image from Shutterstock, chart from TradingView.com
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