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Fitch Ratings Classifies Bitcoin Collateralized Securities as 'Speculative Grade', Warning of High Risk
Summary: Fitch Ratings, an international credit rating agency, released an assessment report on Monday categorizing Bitcoin collateralized securities as 'speculative grade' credit ratings, warning of their 'high risk' which could lead to losses for lenders and investors. The report highlights that the main risk factor is the volatile price of Bitcoin. If the collateral coverage ratio ...
Fitch Ratings, an international credit rating agency, released an assessment report on Monday categorizing Bitcoin collateralized securities as 'speculative grade' credit ratings, warning of their 'high risk' which could lead to losses for lenders and investors. The report highlights that the main risk factor is the volatile price of Bitcoin. If the collateral coverage ratio falls below the specified threshold, it could quickly erode the value of the collateral and trigger additional margin calls and forced liquidation. Fitch cited cases of closure of crypto lending platforms like BlockFi and Celsius in 2022-2023, emphasizing the vulnerability of collateral models under market pressure. This assessment primarily focuses on credit instruments that rely directly on the value of collateral for repayment, excluding equity products such as spot Bitcoin ETFs.
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Link: Fitch Ratings Classifies Bitcoin Collateralized Securities as 'Speculative Grade', Warning of High Risk [Copy]
