DeFi Surfer, a crypto and stock markets content provider, published a blog in which it depicted the “demise” of the major crypto trading financial institution Silvergate Bank. While the bank reached its peak in 2021, the corporation is under threat due to concerns about its future trading.
Silvergate’s 1600% stock surge
DeFi Surfer claims that Silvergate Bank saw a significant increase in deposits after the 2019 IPO. The bank’s deposits have increased sevenfold, according to DeFi Surfer, from $2 billion to $14 billion. The bank’s stock had increased from $13 to $220 per share, a rise of 1600%.
But after reaching its zenith, Silvergate Bank began a downward trend that continues to this day, with its stock dropping to as low as $5, representing a decline of almost 97% and demonstrating a “receded from grace” in a dramatic manner.
It’s worth noting that DeFi Surfer deemed Silvargate’s performance during the crypto upcycle to be “satisfactory,” as the company fell neatly into the “bank with a rapidly growing and cheap deposit base” category, which is viewed as “highly valuable.”
Silvergate’s Billion-Dollar loss
According to the content creator, rising interest rates are to blame for Silvergate’s demise, which will result in a loss of more than $1B by the end of the 3rd quarter of 2022. Silvergate’s balance sheet grew during the crypto bull market, so the company purchased billions in long-term municipal bonds and mortgage-backed securities, according to DeFi Surfer. Unfortunately, interest rates rose quickly throughout 2022, significantly lowering the value of Silvergate’s securities portfolio.
In addition, Silvergate was compelled to liquidate $6 billion worth of its securities, resulting in a loss of nearly $900 million of protection and “eliminating 70 percent of Silvergate’s common equity in the process.”
Furthermore, DeFi Surfer looked into the crypto banking rival of Silvergate, known as Signature Bank, to see if it would be the “next shoe to drop” in the market for cryptocurrencies.
