Why Shares of This Crypto Bank Collapsed This Week
Shares of Silvergate Capital Corporation (NYSE: SI) declined by as much as 36% this week, according to data from S&P Global Market Intelligence. In fact, as of this writing, the bank -- which focuses on cryptocurrencies -- is down a whopping 43% just on Thursday, Jan. 5, accounting for more than its entire decline this week. The company just released a preliminary update for its fourth-quarter results, and things look ugly.
Before the market opened on Jan. 5, Silvergate posted a press release to its website updating investors for the three months ending in September. The bank, which targets the cryptocurrency market, has been hit hard in recent months when FTX, one of its largest customers, filed for bankruptcy amid one of the largest financial scandals in history.
On Dec. 31, Silvergate had $3.8 billion in deposits from digital (otherwise known as crypto) customers. This was down sharply from $11.9 billion at the end of September, an $8 billion hole in just one quarter. Banks struggle when customers withdraw funds all at once, something known as a run on the bank.
Source Fool.com
