Silvergate Capital (SI), one of the crypto industry’s largest lenders, announced Wednesday it would voluntarily wind down operations and liquidate its bank. While the demise of a crypto-based institution comes as no surprise, the warning signs coming from Silicon Valley Bank (SIVB) present a larger issue.
“The concern here is really on a number of fronts for our purposes,” says Hedgeye Financials analyst Josh Steiner in this clip from The Call @ Hedgeye. “One is the perception around risk contagion. Obviously, Silvergate just completely came apart at the seams – it was 90 percent crypto – but Silicon Valley running into problems on this scale is certainly notable.”
On the same day Silvergate said it would close its doors, Silicon Valley Bank announced its average deposit guidance would be down substantially and that it was liquidating its entire $21 billion AFS portfolio.
Watch the entire clip above.