DeFi Surfer, a content creator for the crypto and financial markets, has published a blog post discussing the rise and fall of Silvergate Bank, a leading crypto trading financial institution.
Despite reaching its peak in 2021, the bank is now at risk, raising concerns about its future trade. In 2019, following Silvergate’s IPO, its deposits grew from $2 billion to $14 billion, and its stock price rose by 1600%, reaching $220 per share.
However, the bank’s stock price has since dropped by 97%, reaching as low as $5, indicating a “rapid fall from grace.”
DeFi Surfer attributes this decline to Silvergate’s investments in long-duration municipal bonds and mortgage-backed securities, which caused the bank to suffer a loss of over $1 billion by the end of Q3 2022 due to the growth in interest rates.
The bank was forced to sell off $6 billion of its securities, causing a loss of almost $900 million and wiping out 70% of its common equity.
DeFi Surfer also examines whether Signature Bank, a peer of Silvergate in crypto banking, will be the “next shoe to drop” in the crypto market.