MicroStrategy’s Bitcoin holdings’ impairment charges lessen in Q3 as BTC’s price anchors at $20,000

MicroStrategy is known for being the largest publicly traded Bitcoin holder, with about 130,000 BTC in its wallet. The company has faced criticism as well as praise from the crypto and financial industry following its founder Michael Saylor’s fanaticism. 

However, the bearish state of the crypto market has left the company in significant debt that continues to grow with every quarter.

MicroStrategy in the third quarter

Releasing its Q3 2022 financial results, MicroStrategy highlighted an interesting development in its losses pertaining to Bitcoin. 

The impairment charges reported by the company for the third quarter were no more than $727,000. This figure was a significant reduction from the second quarter when these impairment charges ran up to $917.8 million, marking a 99.92% decrease.

Impairment charges are basically the cost that shows a reduction in the carrying value of an asset on a balance sheet. The reason Q3 noted such low charges is due to the consolidation of Bitcoin’s price. 

The king coin stood at $19,960 at the beginning of July and closed at $19,425 on September 30. This is why the losses did not run up despite MicroStrategy adding 301 BTC to its holdings on June 30.

Regardless, the total losses noted by the company over the course of 21 months since its first BTC purchase stand far higher. With a $3.98 billion original cost basis, MicroStrategy is currently suffering losses worth $1.99 billion. 

Moreover, with one month of the fourth quarter down, MicroStrategy may note similar minimal impairment charges in Q4 since BTC’s price continues to move sideways.

Bitcoin stands at $20,000

The king coin is currently trading at $20,512 after recovering from the lows of $19,136 about ten days ago. Since mid-September, BTC’s price has hovered around $20,000 and will probably continue to do so.

Since the 100-day (blue) Simple Moving Average is still acting as resistance, the price could remain sideways bound within the sub-$20,000 range.

However, if the broader market cues turn bullish, Bitcoin could be looking to test the support line for the next critical resistance (blue) at $22,613. 

BTC/USD 1-day chart

Even though investors and traders may not be able to find profits here, it would set the coin up for an increase to the next critical resistance at $24,600.