Crypto bank shares Silvergate Capital (NYSE: SI) It is trading down 7% as of 11AM ET after receiving some negative sentiment from an analyst.
Wedbush analyst David Chaverini recently released a research note in which he said he’s taking Silvergate Capital off Wedbush’s best ideas list. Chaverini cited the fact that there is a near 100% chance that the US will adopt a central bank digital currency, which could reduce the market ID padsThe US dollar-backed stablecoin DEM, of which Silvergate is the exclusive issuer.
Chaverini also expressed concerns about Diem because the President’s Working Group on Financial Markets, in its recommendation on stablecoins, said issuers should reduce trade correlations.
However, Chavriny gave Silvergate a superior rating due to the bank’s leadership position in its primary high-growth market of facilitating real-time US dollar transfers between crypto hedge funds and cryptocurrency exchanges.
Deem’s partnership has certainly generated a lot of excitement about the stock in recent months, but the partnership’s future remains uncertain. I expect management will provide some comments about the status of the partnership and whether it launched the pilot in its upcoming fourth-quarter earnings report.
However, I still believe that this bank can do well with its real-time payments platform that helps facilitate better cryptocurrency trading.
The platform generated billions of excess deposits that the bank could spread into higher yielding assets in a high rate environment. Unlike many technology and growth stocks, Silvergate’s business model could do very well with higher interest rates.
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