Cryptocurrency Bank Shares Capital of Silvergate (NYSE: SI) continued their impressive run this week. The bank traded over 10% higher as of 2:00 p.m. EDT and is up over 35% this week, following positive news for the bank and cryptocurrencies in general.
Although it has a traditional banking charter, Silvergate is not your typical bank. It has attracted many investors with its Silvergate Exchange Network, which is essentially a payments ecosystem that allows institutional traders to make instant transactions with cryptocurrency exchanges and others on the platform.
The bank also offers Bitcoin-secured lines of credit and entered into a successful partnership earlier this year with Facebook to become the sole issuer of the US dollar stable coin planned by the social media giant.
There appear to be three big things that have pushed Silvergate higher over the past week. First of all, Morgan stanley Analyst Ken Zerbe launched a cover on Silvergate with a very bullish note. Next, Federal Reserve Chairman Jerome Powell made it clear that he had no intention of banning cryptocurrencies or stablecoins. Finally, there has recently been a strong rally among cryptocurrencies like Bitcoin. Due to the amount of business Silvergate does in the crypto space, it will naturally evolve at least somehow in correlation with that of Bitcoin and the crypto market.
I remain bullish on Silvergate Capital. As I have written in the past, while there is regulatory risk with some of Silvergate’s business, I believe that risk is not necessarily as severe as some fear.
SEN attracts tons of deposits free of charge, helps the bank generate commission income by selling other bank products to customers on SEN, and in general, should be able to increase loans and earning assets. interest at a much faster rate than the banking industry as a whole.
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