How This Bank Is Using Crypto To Supercharge Their StockDec 09, 2021
Today we're going to cover a new type of bank. Before you click off this post, just know that this isn't your average boring bank.
This bank is one if not the most unique public banks in the world. This is because this bank is growing like crazy and it's all because of one thing: cryptocurrency
Now Introducing: Silvergate
So unlike Chase, Bank of America and the rest of the large global players who are more or less just ignoring crypto, Silvergate is taking the complete opposite standpoint and embracing crypto wholeheartedly.
Silvergate is doing this bulk of this via their product: The Silvergate Exchange Network (SEN)
Without boring you on the details, at the heart of SEN is a network that allows the transfer of USD between their crypto customers.
The reason this is important is because unlike other banks who don't offer it, Silvergate is giving their clients quick and easy access to the growing field.
And this is translating to insane asset deposit growth from their clients - which represents the core of their business.
While this might sound like a small feat, that couldn't be further from the truth. Let us prove it to you:
- Asset balances are up over 400% in the last 12 months and are expected to continue growing over 50% in the upcoming 12 months. Really think about that for a second. 400% growth for a bank of all companies, is BANANAS. And while it's near impossible to keep that growth up year over year, it's not like 50% is exactly bad. This growing asset balance is a testament to their unique solution in the market.
- Silvergate's non interest-bearing deposits represent 99% of their asset accounts. Comparing this to their peers we see that the industry average is near 35%. If you don't know why that matters or what it even means, here's the key takeaway: If Silvergate is paying 0 interest on 99% of their deposits, that means their costs are WAY LOWER than any of their competitors. Imagine what happens when interest rates start to go back up? Well it should be obvious - Silvergate is going to save that much more money and continue expanding their margins. With 0 sensitivity to rising interest rates on their deposit accounts, Silvergate is setting themselves up to be a huge winner.
- And not only will they save on costs but their assets will perform very well in a rising interest rate environment too! This is because most of Silvergate's assets are variable rate assets - with rising interest rates, their assets increase more substantially in value.
When you combine this all together, you're looking a crypto first bank that is surging in growth like crazy.
If you're not familiar with the financials sector, this is far from normal and this is why the stock has surged so much and will continue to have insane upside going forward!
With the stock is up 350% in the last year but down 17% in the last month, many might be skeptical thinking that the investment is way past gone!
But this couldn't be further from the truth, as we project asset deposits to continue growing. Pairing that with a projected rise in interest rates and this bank still has plenty of room to grow.
By differentiating their product offering and adhering to the crypto crowd, Silvergate should be a position to continue growing market share over the next decade!
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