BofA Initiates Coverage of Silvergate With ‘Buy’ Rating, Sees 50% Potential Upside

The crypto bank is one of the best positioned companies to benefit from the expanding use of stablecoins, the report said.

AccessTimeIconMar 21, 2022 at 1:48 p.m. UTC
Updated May 11, 2023 at 4:09 p.m. UTC
10 Years of Decentralizing the Future
May 29-31, 2024 - Austin, TexasThe biggest and most established global hub for everything crypto, blockchain and Web3.Register Now

Silvergate Capital (SI) offers investors an alternative way to gain exposure to the growth of the cryptocurrency ecosystem without the need to actually own a digital asset, Bank of America said in a report initiating coverage of the stock with a buy rating and a $200 price target, implying a near 50% potential upside.

  • The crypto bank is well positioned to benefit from the expanding use of stablecoins for payment, commerce, and remittance, following the acquisition of Diem’s assets earlier this year, analysts led by Brandon Berman wrote on Monday.
  • In its capacity as a regulated financial institution, Silvergate is better prepared to “navigate the complex, and still evolving regulatory environment applicable to the digital currency industry,” the report said.
  • Bank of America forecasts Silvergate to grow its balance sheet five times faster than the average bank under its coverage over the next three years. The “first mover advantage” has resulted in tremendous client growth, with close to $790 billion transferred over the Silvergate Exchange Network, its global payment platform, the report added.
  • Increased institutional adoption gives Silvergate a long runway for continued client and earnings growth, it added.
  • As one of the most interest rate sensitive banks in the U.S., helped by its near-zero cost deposit structure, Silvergate is expected to outperform against a backdrop where the Federal Reserve (Fed) is expected to raise rates around six times this year, the bank’s analysts said.
  • Volatility in the near term is to be expected, given that the stock is highly correlated to the price of bitcoin (BTC), but as the bank expands its products and service capabilities, the shares should trade more on fundamentals, the note added.
  • Silvergate shares closed at $137.30 on Friday.
  • Why Worldcoin Is Launching a Layer 2
    20:07
    Why Worldcoin Is Launching a Layer 2
  • Polymarket Traders Bet on Fed Rate Cuts; Bitcoin Spot ETFs Register Five-Day Withdrawals Streak
    02:17
    Polymarket Traders Bet on Fed Rate Cuts; Bitcoin Spot ETFs Register Five-Day Withdrawals Streak
  • Base Monthly Active Addresses Increased by 160% in March: Nansen
    00:50
    Base Monthly Active Addresses Increased by 160% in March: Nansen
  • Bitcoin Halving: We Answer Your Questions
    04:16
    Bitcoin Halving: We Answer Your Questions
  • Disclosure

    Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

    CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.

    Author placeholder image

    Will Canny is CoinDesk's finance reporter.


    Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.