Silvergate Crypto Stocks: Worsening Silvergate Crisis Shakes Crypto Stocks

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Shares of Silvergate Capital Corp fell 11% on Monday after the bank suspended its crypto payments network and expressed doubts about the viability of its business.

The stock closed the volatile session down 6.4% at $5.40, after wild swings between gains and losses throughout the day.

Several crypto stocks also closed in negative territory. Signature Bank, its crypto lending counterpart, fell 2.5%. BTC mining machine makers Ebang International and Canaan Inc fell 2.8% and 8.4% respectively. BTC buyer MicroStrategy fell 3.8% and exchange Coinbase Global fell 2.7%.

Crypto-specialty bank Silvergate said on Friday evening that it had made a “risk-based decision” to discontinue the Silvergate Exchange Network (SEN) with immediate effect.

“The SEN is Silvergate’s main flagship product which was previously the main attraction for depositors to bring funds into the bank,” Wedbush analysts said.

The shutdown could signal that Silvergate may be considering winding down its operations, they added.

Check out stories for your interest Silvergate shares hit a record low of $4.86 on Friday, losing nearly 98% of their value since closing at a record low in November 2021 and wiping out more than $7 billion the market capitalization of the company. “The crypto market reacted to negative news from Silvergate Bank, with bitcoin and ethereum down around 4.8% for the week,” analysts at brokerage Bernstein said.

Chart: Shares of crypto-enabled bank plunge as winter bites into the industry

“We believe a receivership/liquidation scenario is a distinct possibility and arrive at a liquidation value of $5 per share,” Wedbush analysts said. The estimated price marks about a 13% drop from the stock’s previous close.

A host of crypto heavyweights, including Coinbase Global, have dropped Silvergate as a banking partner.

The firm is struggling to stay afloat after the collapse of Sam Bankman-Fried crypto exchange FTX in November prompted investors to withdraw $8 billion in deposits from the bank in the last three months of the year.

Silvergate announced a net loss of $1 billion in the fourth quarter.

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