Bitcoin price nears $42,000 as FASB directs US companies to measure BTC at “Fair Value”

●The Financial Accounting Standards Board (FASB) issued standards that will require companies to report their crypto holdings at fair value.

●Bitcoin price per the fair value model is set at $36,000, 14% below the market price.

●Grayscale Bitcoin Trust (GBTC), on the other hand, is seeing considerable growth ahead of potential ETF approval.

When Bitcoin price rallied this past month, it brought significant profits to its investors. This included not just retail but also institutional investors and companies such as MicroStrategy, Tesla and others that hold crypto assets. 

There is the expectation of a further increase in January 2024 if the Securities & Exchange Commission (SEC) approves spot Bitcoin ETF applications. However, before it happens, the FASB made a change that might affect their overall profits and losses.

Bitcoin to receive fair value treatment soon

Bitcoin price fluctuation impacts the net profits and losses of crypto holders, and with different purchase prices, it also affects the reported income of the enterprise. The Financial Accounting Standards Board (FASB) published an Accounting Standards Update (ASU) on Wednesday that is set to improve the accounting for and disclosure of certain crypto assets.

Per the new standard, an entity holding certain crypto assets will be required to measure those crypto assets at “fair value”. This will be applicable at each reporting period with changes in fair value recognized in net income. 

These amendments are set to come into effect during the 2025-2026 fiscal year, although the option of early adoption is also available. 

Fair value of an asset refers to the actual worth of an asset, which is derived fundamentally and is not determined by the factors of any market forces that account for market price. 

According to the fair value model of Glassnode, Bitcoin price is technically at $36,000, which is a steep 14% decline from the market price of $41,917.

Bitcoin Fair Value,  Source: Glassnode.

This will largely affect the overall holdings of the crypto companies; however, by the looks of it, a cemented policy is a positive development for digital assets in the long run. 

This point of view was also shared by Michael Saylor, the CEO of MicroStrategy, who is presently the largest public holder of BTC. He tweeted, “This upgrade to accounting standards will facilitate the adoption of BTC as a treasury reserve asset by corporations worldwide.

Technical Analysis: Bitcoin price dip makes no impact on Grayscale’s growth

Bitcoin price has largely affected the value of Grayscale Bitcoin Trust (GBTC) in the past, but this impact is likely fading away. The potential of GBTC turning into a spot Bitcoin ETF by next month seems to have imbued considerable optimism in investors. This is evident by the fact that despite the cryptocurrency falling to $40,000 this week, GBTC’s premium kept improving.

While the premium to net asset value (NAV) is still negative at -9.47%, it is still a significant improvement from -44% six months ago. This is also a sign that Bitcoin price correcting has a much lesser impact on the ETP, and its value will likely be driven by broader market cues.

GBTC discount to NAV

With the hype surrounding the ETF, there is also a chance that GBTC might manage to completely recover from its present discount and trade at a premium as it did before February 2021.