At the weekend, the price of Bitcoin briefly fell to around $ 31,000, more than 50 percent less than last month. It has bounced back a bit and is currently trading at around $ 37,000.
“Last week long positions totaling around $ 20 billion were liquidated,” Sam Bankman-Fried, managing director of the crypto-derivatives exchange FTX, told the DealBook newsletter. “In terms of price movements, most of it is liquidations,” he said, suggesting the worst was over.
But he also noticed news from China late Friday about crackdown on bitcoin mining and trading. This added to other news of official investigations that have spooked crypto investors from Hong Kong, Canada and the United States in the past few days.
Companies with Bitcoin on their balance sheets may get nervous. For accounting reasons, the cryptocurrency is valued on company accounts at the purchase price. When the value increases, it is not reflected in a company’s accounts. However, if it goes down, it will hurt value and hurt quarterly earnings. Three big corporate investors in Bitcoin are Tesla, MicroStrategy, and Square. Here they are:
Tesla: The electric vehicle company bought $ 1.5 billion in bitcoin last quarter at an average price of $ 34,700 per coin, not far from its current price. Elon Musk, Tesla’s chief executive officer, has signaled that the company isn’t selling, but probably isn’t buying either.
MicroStrategy: The business intelligence software company has spent approximately $ 2.2 billion on Bitcoin, at an average price of $ 24,450. The company bought more last week and is still sitting on big profits.
Square: The payments company, led by Twitter boss Jack Dorsey, bought two batches of Bitcoin for its treasury – $ 50 million in October at around $ 10,600 a coin and $ 170 million in February at one price of around $ 51,000. An impairment loss of $ 20 million was recorded in the most recent quarter. There are no longer plans to buy, its chief financial officer said this month.