Digital wealth meant little to banks when it came to a mortgage. And Burniske, 63, wanted to keep his coins rather than trade them for dollars. 

“If you cash out, you have to pay sizable tax and you’re leaving a lot of upside on the table because you’re getting out early,” he said.

Then came an option that wasn’t available when Burniske found the properties late last year: a 30-year fixed-rate mortgage secured by part of his Bitcoin and Ethereum holdings. He nailed down the loan from Milo Credit, a Miami-based startup that’s seeking to tap into the burgeoning pool of crypto loyalists who want to diversify their wealth while hanging on to their tokens.

Crypto mortgages are the latest example of the deepening role of digital coins in the U.S. real estate market, with property buyers and lenders alike embracing the volatile currencies to underpin deals for hard assets. Last year, Fannie Mae started allowing borrowers to use crypto for their down payments. New buildings going up in tech hot spots like Miami are accepting digital tokens for deposits on condos. A house in Tampa, Florida, even sold as an NFT earlier this year. 

Eoin Treacy's view

The conventional metrics we have available come nowhere close to measuring the extent of leverage in the system. Companies buyback shares instead of paying dividends for a variety of reasons. From an investor’s perspective buybacks are preferrable to dividends because they are a tax-free benefit.

Bulls of both stocks and cryptocurrencies are in no mood to sell their holdings. Anyone with highly appreciated assets wishes to avoid capital gains tax. That justifies holding through a good-sized correction because the relative cost of selling, paying taxes, and possibly missing the bottom before the buying back are too high.

Bull markets develop their very own ecosystem with penalties for selling too early, rewards for holding on regardless of how stiff medium-term corrections are and leverage to make it all easier. This works until liquidity tightens and chokes off the river of new money required to sustain ever higher prices.

The correction in 2020 mostly affected stocks but most people’s wealth is stored in their homes and property prices rose. That is the typical characteristic of a mid-cycle slowdown. Major bear markets see both property and stocks fall together. As stock and crypto funded home purchases become more commonplace, the interlinkages between the two asset classes will become more pronounced which increases scope for contagion when the bull market eventually ends.