Crypto Bank Silvergate’s Stock Defended By Analysts Amidst FTX Concerns

Shares have fallen this week on broader crypto market worries, including the fact that FTX is a customer.

AccessTimeIconNov 9, 2022 at 4:39 p.m. UTC
Updated Nov 9, 2022 at 5:49 p.m. UTC
Consensus 2023 Logo
Join the most important conversation in crypto and Web3 taking place in Austin, Texas, April 26-28.

Michael Bellusci is CoinDesk's crypto reporter focused on public companies and digital asset firms.

Consensus 2023 Logo
Join the most important conversation in crypto and Web3 taking place in Austin, Texas, April 26-28.

Silvergate Capital (SI) was defended by Wall Street analysts after its shares plunged over 20% on Tuesday amid the ongoing concerns about crypto exchange FTX.

Silvergate is a crypto-focused bank with its own Silvergate Exchange Network (SEN), a fiat on-ramp for bitcoin (BTC) markets, with FTX being one of their customers.

Analysts don’t see a lasting hit to Silvergate, however. BTIG analyst Mark Palmer said he spoke on Tuesday to Silvergate's president, Ben Reynolds, who told him that Silvergate neither holds FTT tokens nor lends against them, and that FTX’s challenges have had no direct impact on the company.

“As for the suggestion expressed by some on social media that SI’s SEN Leverage platform could suffer losses due to exposure to FTX, [Reynolds] noted that all of the platform’s loans are significantly overcollateralized by bitcoin that could be liquidated to cover those exposures if necessary,” Palmer wrote in a research note. BTIG has a buy rating and $135 price target on Silvergate.

Separately, Canaccord highlighted that Silvergate doesn’t hold any crypto assets of its own, and should be able to avoid additional risk from the FTX situation.

“In the event that FTX ceases operations or some customers migrate to other exchanges, it is highly likely that Silvergate will still capture that trading volume under its operational umbrella,” Canaccord analyst Joe Vafi told clients in a note. Canaccord has a buy rating and $150 price target on Silvergate.

Silvergate shares are down close to 11% Wednesday morning to $35.26.

DISCLOSURE

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

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.

Author placeholder image

Michael Bellusci is CoinDesk's crypto reporter focused on public companies and digital asset firms.


Learn more about Consensus 2023, 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.


Author placeholder image

Michael Bellusci is CoinDesk's crypto reporter focused on public companies and digital asset firms.