Customers pulled at least $8 billion from the bank since crypto exchange FTX failed in November. Meanwhile, a drop in crypto prices as the Federal Reserve kicked up interest rates to tame hot inflation also Silvergate.
“[We] see investors and traders pulling their money, and the institutions have little to no mechanism to stop that. The adverse effect of this event negatively influences the price of bitcoin,” Naeem Aslam, chief investment officer at Zaye Capital Markets, wrote in a Friday note.
“But we are still surprised that the price of bitcoin hasn’t fallen as sharply as many had expected, especially [as] Silvergate was one of the most important banks for crypto operations.”
Risk appetite was also hit Friday by a plunge in shares of Silicon Valley Bank. The stock sank more than 60%, extending a Thursday selloff on contagion worries in the banking industry.
A key lender to technology startups, Silicon Valley Bank this week said the climb in interest rates spurred billions in losses on a $21 billion bond portfolio. CNBC reported on Friday the company is in talks to sell itself after attempts to raise capital fell short.
Morgan Stanley, BofA and Wells Fargo shares were lower during Friday’s session while JPMorgan stock edged up.
