Bitcoin has held everyone’s attention for over a decade now.
And in recent years, the crypto has made headlines for increasing institutional ownership… including by public companies adding it to their portfolios.
Importantly, that interest may be about to ramp up thanks to a recent accounting change…
Now, at the word “accounting,” you might be tempted to set this issue aside in boredom.
But understanding this change could help explain increased speculation in Bitcoin. More speculation could fuel even more volatility…
And that could put you on the path to profits… especially with my unique strategy.
So let’s take a look at what’s changed…
Bitcoin’s New Accounting Rule
The Financial Accounting Standards Board (FASB) establishes reporting rules for U.S. companies.
In the past when companies tallied their books, they had to adjust the value of their crypto holdings lower if their prices fell.
Yet the only time the value of crypto assets could be revised higher was when a company sold those crypto holdings.
In other words, companies holding Bitcoin had to report all of the downside… but none of the upside.
That artificially depressed the value of a company’s assets until it decided to sell its crypto.
But in December, the rule changed.
The FASB revised its standards so companies can now report their crypto holdings at their fair market value. And changes in value flow straight to a company’s bottom line.
For companies holding crypto, that directly impacts their quarterly financial reports and earnings per share.
And it could open the floodgates for more crypto volatility. Here’s why…
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Brace for More Crypto Volatility
When Tesla (TSLA) reported its fourth-quarter earnings this week, the company revealed a surprise profit boost.
Tesla’s earnings included a $600 million windfall gain on its Bitcoin holdings.
That’s because Tesla can now report its crypto holdings at fair market value.
The massive gain accounted for over a quarter of Tesla’s earnings. Without it, Tesla would have badly missed analyst estimates for earnings.
For better or worse, the FASB rule change was like lifting a boulder off of TSLA’s reporting numbers.
That’s why this rule change could influence speculation on Bitcoin.
The number of Bitcoins held on public corporate balance sheets already more than doubled last year.
And this change could make the idea of holding Bitcoin more attractive to companies considering it.
With a growing number of corporations trading Bitcoin, we can expect even more volatility in the crypto as well. Bitcoin is already more than four times more volatile than the stock market… but it could get even wilder.
That’s great news for traders who thrive on price swings.
I’ve already closed two Bitcoin trades in January for gains of 47% and 42%. Those profits were realized in just seven days and one day, respectively.
Those returns also came from moves to the upside and downside.
That’s one of the benefits of how I trade Bitcoin – with a method I call “Bitcoin Skimming.” Critically, my strategy means you don’t have to own any Bitcoin to profit. We do all these trades from a regular brokerage account.
And I’m preparing to capitalize on more crypto volatility in the days ahead.
So if you want to get in on our next trade, then be sure to check out my recent briefing on this strategy. I don’t want anyone to miss out on the Bitcoin swings that are coming in 2025.
Happy Trading,
Larry Benedict
Editor, Trading With Larry Benedict