How Silvergate Capital Stock Rose 18.9% Last Month

What happened

Shares of Silvergate Capital (NYSE: SI) gained 18.9% in February, according to data from S&P Global Market Intelligence. The company's laser-like focus on the cryptocurrency market typically makes the stock move in tandem with Bitcoin (CRYPTO: BTC) and Ethereum (CRYPTO: ETH), but this particular period had a different ending.

SI Chart

SI data by YCharts.

So what

Silvergate's stock tracked right alongside Ethereum and Bitcoin through the first three weeks of February. All three posted returns of more than 15% in the first week as cryptocurrencies gained some support from traditional banks and next-generation financial app developers. Then they all retreated to a roughly break-even level for the month when crypto investors refocused on inflation worries and geopolitical risks.

But Silvergate broke away from the leading cryptocurrency names at the end of the month, posting massive trading volumes during that period. The company didn't have any specific news in the last week of February, but it looks like institutional investors started or increased their positions in this stock as a delayed reaction to good news earlier in the month.

Now what

Silvergate actually had two bits of meaningful news last month, which the market brushed off at the time but might have revisited later on.

First, the company took over the Diem stablecoin from former partner Meta Platforms, ending a partnership that started when Meta was known as Facebook. Having full control over a proper stablecoin could prove to be useful in Silvergate's capitalization services for leading cryptocurrency exchanges, though Diem is not much more than a name right now.

A pile of gold and silver coins stamped with various cryptocurrency logos.

Image source: Getty Images.

Then, Silvergate expanded its digital currency exchange network to include transactions based on the euro. The new network uses the same underlying platform as Silvergate's dollar-based services and is interconnected with its older sibling. This launch both improves the exchange network's stability amid shifting currency exchange rates and underscores Silvergate's global ambitions. The euro network should provide a material boost to the company's revenue streams in upcoming quarters.

All that being said, the gains didn't have much staying power. Silvergate's stock has fallen more than 19% in the first week of March on no company-specific news. Once again, shares are trading right between Ethereum and Bitcoin on a year-to-date basis.

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Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Anders Bylund owns Bitcoin and Ethereum. The Motley Fool owns and recommends Bitcoin, Ethereum, and Meta Platforms, Inc. The Motley Fool recommends Silvergate Capital Corporation. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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