Silvergate Bank’s Plunge Highlights Risks of Crypto Industry
8. Januar 2023
• Jim Cramer talked about why Silvergate is a ‚pivotal‘ part of the crypto ecosystem on Mad Money, CNBC.
• Silvergate’s shares plummeted, losing more than 43% yesterday, then another 2% or so. They are down by more than 90% from their all-time high in November 2021.
• According to Cramer, stocks can always go lower and as long as they’re above zero, it’s fine. However, Silvergate is a pivotal part of the crypto ecosystem because it’s a „great example of everything that’s wrong with this industry.“
On the popular CNBC show Mad Money, host Jim Cramer discussed why Silvergate is a ‚pivotal‘ part of the crypto ecosystem. Silvergate, a bank founded in 1988, had seen its shares plummet, losing more than 43% yesterday and another 2% today. This brought the bank’s share price down by more than 90% from its all-time high in November 2021.
The bank’s failure was largely blamed on the breakdown of the crypto industry, which prompted Silvergate to fire 40% of its staff and sell assets at a major loss. Silvergate had been working on a Money Market Fund (MMF), which Cramer described as the most dangerous link in the crypto chain.
Cramer commented that stocks can always go lower and as long as they’re above zero it’s fine. However, he was concerned that Silvergate’s market cap could shrink to the point where it would be off-limits for discussion on air. He described Silvergate as a „great example of everything that’s wrong with this industry“ and emphasized the importance of addressing this issue.
Silvergate Bank was founded as a savings and loan association in 1988 and was transformed into a bank in 1996. It was quite small at first, with just three branches, but it has since grown to encompass assets worth over $2 billion. It provides services to clients such as FTX units and Alameda, and it has been a key player in the crypto industry for years.
The news of Silvergate’s failure has been a major blow to the crypto industry, and it serves as a stark warning to investors. However, the bank’s failure is also an opportunity to assess what went wrong and to learn from it. As Cramer said, it is essential that we address this problem so that we can prevent similar issues from happening in the future.