Hot Crypto News Today This is why a research firm raised red flags over crypto mortgage risks You Must Read To Get More Information For Trading and Investment.
Cryptocurrencies have an inherent risk element that has got a lot to do with their volatile nature. This is why many famous personalities have questioned its value with the recent being Warren Buffet. The billionaire said he will never buy Bitcoin even at $25 given the fact that it doesn’t produce anything tangible.
Florida-based ratings and research firm Weiss Ratings are the latest authority to censure the usage of cryptocurrencies. This cautionary warning came over the risks of crypto mortgages amid the current economic climate in the United States. Mortgage rates are rising quickly in the United States. Reportedly, the domestic mortgage rates rose at the fastest pace in 35 years, for instance.
Yet different users craved digital assets given their market capitalization over the years.
In the 3 May report, Weiss analyst Jon D. Markman urged caution with such mortgages, citing the poor performance of stocks and crypto this year. The cryptocurrency market suffered a major correction of 2.5% amidst the rising fears. Altcoins too witnessed the wrath of bearish sentiments across the board.
Even, U.S. property prices faced headwinds from a change in Fed policy and rising mortgage rates.
Various macro analysts have raised similar concerns regarding cryptocurrencies amidst rising inflation. An analyst named Alex Kruger boldly suggested that the Fed’s latest announcements set for this week “will determine the fate of the market” moving forward.
A 2022 recap
First came the Fed. Then the Netflixpocalypse. Then the Russian invasion. Then the sanctions. Then the Fed and the largest treasury dump ever. This week it was earnings. Next week the Fed again.
The Fed's QT announcement on Wed will determine the fate of the market
— Alex Krüger (@krugermacro) April 29, 2022
The demand is real
Different platforms, not just within the crypto sector but even outside the sphere have incorporated the digital asset class. Milo, a digital banking startup based out of Miami, fell under this umbrella. The said firm offered 30-year mortgages backed by Bitcoin (BTC), Ethereum (ETH), or stablecoins as collateral.
In fact, Milo raised $17 million worth of Series A funding in March and had plans to develop its mortgage products to meet larger demand.
Surprisingly, the firm required zero down payments, and the loan rates varied between 3.95% and 5.95%. However, Weiss analyst Jon D. Markman quickly addressed some setbacks following this offering. He asserted,
“The product seems to be like a win-win, assuming real estate and crypto prices keep rising … except there are signs both bets are unlikely to be winners in the near term. Bitcoin is off by 40% since it reached $66,000 in November 2021.”
Even though such offerings come with their terms and conditions, risks persist. ‘It’s an interesting strategy … but given current market conditions, investors should be skeptical, especially with financial stocks,’ he concluded.
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