What happened
Shares of Silvergate Capital (SI) jumped as much as 21% out of the gate this morning. While shares have come down since then, the bank still traded much higher as of mid-morning.
So what
Silvergate Capital, which went public in 2019, is a roughly $5.6 billion asset bank based in La Jolla, California. The bank specializes in banking cryptocurrency clients such as institutional traders that trade various digital assets and crypto exchanges through its in-house payments system called the Silvergate Exchange Network (SEN).
SEN is a real-time payments network that can clear transactions in U.S. dollars instantly around the clock, 365 days a year, between two users in the network. This is ideal for institutional crypto traders and crypto exchanges because cryptocurrencies trade around the clock.
Image source: Getty Images.
Shares of Silvergate have always appeared somewhat tied to the prices of crypto assets such as bitcoin (BTC -0.19%), which rocketed this morning after Tesla announced it had purchased $1.5 billion in bitcoin. Tesla also said it would start accepting bitcoin for payment of products.
Additionally, bank stocks got off to a good start this morning as the yield on the 10-year treasury note ticked higher, which is good for banks because it increases interest payments on long-term debt they loan out.
Treasury Secretary Janet Yellen recently said President Joe Biden's proposed $1.9 trillion stimulus bill could return the U.S. to full employment by 2022. The yield on long-term treasury notes tends to move higher as the prospect of inflation and future interest rate hikes comes into play.
Now what
Silvergate was the top-performing bank stock in 2020. As conditions improve for the banking sector and digital assets like bitcoin become more mainstream and surge higher, this stock should follow suit.
