Regulation Pulls Back Crypto, China Threatens Tech And MicroStrategy Refuses To Sell Bitcoin

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Last Updated on 4 August 2021 by CryptoTips.eu

Jeroen Kok

Jeroen is one of the lead copywriters on Cryptotips.eu and discusses all recent events in the crypto market. This includes news updates, but also price analyzes and more. He developed his passion for cryptocurrency during the bull run in 2017. He has learned a lot since then. The combination of cryptocurrency and creative writing is perfect for Jeroen and an excellent way to share his knowledge with a wide audience. Find me on LinkedIn / jeroen@cryptotips.eu
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Bitcoin pulled back to the $37k-$38k level as investors feared the threat of regulators coming in to rein in crypto markets. Over in China an editorial in a state run newspaper sparked a tech stock selloff (online gaming company Tencent saw a noticeable decline) and Michael Saylor’s MicroStrategy refuses to sell.

Katie Stockton, managing director of Fairlead Strategies, commented on Bitcoin’s latest move, stating:

We expect the pullback to mature in one to two weeks near the 50-day moving average around $34K, after which bitcoin is likely to clear $42.6K for a revised upside target near $51K.”

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$2 Billion in Bitcoin

According to a recent article in the renowned Economist, the expansion of the world of crypto seems unstoppable. The simple growth of currencies listed on CoinMarketCap alone showed a doubling in the past twelve months, or from 6,000 coins to some 11,145. The Economist now admits that global adoption of crypto is only a matter of time.

With numbers like that, it is no wonder that MicroStrategy CEO Michael Saylor continues to be bullish on Bitcoin, even though Wall Street seems less convinced.

The financial investment vehicle MicroStrategy by now has some $2 billion in Bitcoin on their balance sheet. Given the fact that the world’s biggest crypto ended the second quarter lower than it started it, which for MicroStrategy meant a $424.8 million loss on their investment. Still, Saylor’s company is planning to acquire more.

Of course, the losses suffered by the company are theoretical losses; losses on paper only, calculated based on the price of Bitcoin at the end of the second quarter. It is anyone’s guess at this point what will be the result at the end of the year. Will Saylor have Diamond hands and refuse to sell at any cost?

Tesla has also just released its results for the second quarter. Their report revealed only a $23 million loss in value of the Bitcoin held by Elon Musk’s company.

Generally Accepted Accounting Principles

Both MicroStrategy and Tesla classify Bitcoin as an intangible asset on their balance sheets. Taking into account American accounting principles, they must therefore take into account a loss in value, even theoretical, but they are not able to benefit from a capital gain on Bitcoin, as long as they do not really profit from their assets in selling them.

The losses of $ 424.8 million were thus calculated in accordance with generally accepted accounting principles in the United States (GAAP), which are used to prepare most of the financial statements.

Wall Street seems less convinced of investing in Bitcoin than it was at the beginning of the year, and it now looks squarely to Saylor as a test case for long term HODLing of crypto.

billiondigital / Depositphotos.com