BlackRock has increased its holdings in the cryptocurrency bank. The stock of Silvergate Capital, SI, rose by 9.96% today.
BlackRock, the world's largest asset manager, has opted to raise (1) its holdings in cryptocurrency bank Silvergate Capital, even though the firm has been going through a somewhat difficult period over the past two months.
According to the most recent document submitted to the United States SEC on Tuesday, January 31, BlackRock has boosted its holdings in the crypto currency bank Silvergate to 7.2%.
The Ownership Held by BlackRock in Silvergate Capital
Before this point, BlackRock's holdings in Silvergate amounted to 5.9%. The bank's credibility has improved due to the surprise and major increase in the value of its holdings. On Tuesday, shares of Silvergate Capital had a price appreciation of 8.15%, ultimately closing at $14.24.
According to the data provided by FactSet, more than 70 percent of the Silvergate Capital shares that are openly accessible are sold short. Investors in the Silvergate crypto bank are holding a massive rally to express their relief.
Since the repercussions of the hack on the crypto currency exchange FTX in November 2022, this crypto currency & blockchain institution has been having a tough time.
When Silvergate Bank was associated with FTX in the past, its clients and its investors exhibited a high distrust of the bank.
In such a context, the assistance of BlackRock comes as a big windfall for Silvergate Bank, which might help it sail over the current challenging market conditions. BlackRock is a critical player in the financial services industry.
Biggest Hurdles for Silvergate Bank
As was previously said, since the FTX scandal, Silvergate Bank has faced significant obstacles. The share price of Silvergate Bank, which has been on a significant downward trend over the past two months, may be summarized as follows: Even though the market as a whole increased in value throughout January 2023, the SI stock maintained its downward trend.
The Silvergate Bank recorded a net loss of $1 billion during the final quarter of Q4 2022 as a direct result of the implosion of the FTX.
The share price of Silvergate Bank has dropped by twenty percent (-20%) so far in 2023. Over the past year, the cost of SI stock has fallen by more than 87 percent.
Because of the allegations that the Silvergate Bank had a link with the FTX exchange, the bank saw significant withdrawals during the fourth quarter.
In addition, the bank took measures, such as selling debt instruments and acquiring funds on a wholesale level, to keep the cash liquidity stable.
Alan Lane, the Chief Executive Officer of Silvergate, has stated that the bank would not deviate from its purpose of providing service to its primary institutional customers.
The previous month saw layoffs at Silvergate Bank as a necessary response to the challenging economic environment and significant withdrawals.