If speech recognition appears to be working well despite this icon being shown, however, it could be an indicator your microphone input is being filtered so that no background noise comes through, meaning below a certain volume level, the speech recognition only receives complete silence, which it interprets as the microphone being muted.
You could check the software for your audio device driver to see if this filtering can be disabled, though if speech recognition accuracy and responsiveness are satisfactory as is, that shouldn't be strictly necessary.