BlackRock Increases Stake in Crypto Bank Silvergate Capital, SI Stock Jumps 9.96%

On Feb 1, 2023

BlackRock’s support comes at a time when Silvergate Bank has been going through a pretty rough phase following the implosiong of crypto exchange FTX.

While crypto bank Silvergate Capital has been going through a pretty rough phase over the last two months, financial giant BlackRock decided to increase its holding in the company. As per the latest filing on Tuesday, January 31 with the US Securities and Exchange Commission (SEC) BlackRock has increased its holding in crypto bank Silvergate to 7.2%.

The Stake of BlackRock in Silvergate Capital

Previously, BlackRock’s stake in Silvergate stood at 5.9%. This massive boost in its holdings at such a time boosts investors’ confidence in the bank. Shares of Silvergate Capital (NYSE: SI) jumped by 9.96% on Tuesday ending the trading session at $14.42 levels.

As per the FactSet data, more than 70% of Silvergate Capital shares available freely are sold short. This is a huge relief rally for the investors of Silvergate crypto bank.

This cryptocurrency and blockchain bank has been struggling severely ever since the fallout of the crypto exchange FTX back in November 2022. The association of Silvergate Bank with FTX in the past led to severe skepticism among its customers and investors.

In such a scenario, BlackRock’s support comes as a major boon for Silvergate Bank which could help it sail through the current tough market conditions.

Major Challenges for Silvergate Bank

As said, ever since the FTX blowup, Silvergate Bank has been facing major challenges. Over the last two months, the stock price of Silvergate Bank (NASDAQ: SI) has been on a massive downfall. Even while the broader market rallied during January 2023, the SI stock continued to head downwards.

Amid the FTX implosion, Silvergate Bank reported a net loss of $1 billion during the last quarter of Q4 2022. So far in 2023, the stock price of Silvergate Bank has tanked by 20%. The SI stock has already plummeted by more than 87% over the last year.

During the fourth quarter, the Silvergate Bank witnessed massive withdrawals amid its alleged relationship with the FTX exchange. The bank also initiated action to maintain the cash liquidity including the selling of debt securities and wholesale funding. Silvergate CEO Alan Lane said that the bank will stay firm on its mission of serving its core institutional clients.

Amid tough macro and major withdrawals, Silvergate Bank had to resolve staff layoffs last month.

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Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.

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