Bitcoin will always have buyers, says Silvergate CEO
- Bitcoin’s highest trading price was around $70K, recorded in 2021.
- Silvergate’s margin profit fell by 4 percent in Q3 2023.
Silvergate CEO Alan Lane believes that Bitcoin is one of the best performing players in the crypto market even after cryptointers.
Lane pointed to declining volume on the Silvergate Exchange Network (SEN) as evidence.
In the mid-quarter update, Lane noted, “I think bitcoin is separate from everything, and that’s evident by how well the price has held up and by the fact that we still have an active SEN leverage book where we lend against bitcoin.”
The past few months have been the worst for the crypto market and the crash of FTX is plaguing the crypto market more than ever.
Lane also noted, “whether deposits are up or down, we have the liquidity and capital adequacy to support the volatility.”
The San Diego-based bank secured limited exposure to FTX in addition to negligible outstanding debt and accounted for less than 10% of the $11.9 billion in digital deposits on the exchange. Despite the claims, the share price fell up to 22%, since the FTX collapse, with this estimated amount of debt.
Regardless of the volatility in the crypto market, Lane is confident, stating that there are always buyers, especially with bitcoin,” adding, “we will get through this as we have previous cycles and continue to serve the industry.”
In the context of market transition risk associated with FTX, Lane cited that exploiting a token that had no value” was the main origin of instability – clearly regarding FTT the original token of FTX “That is not what Silvergate does. We are moving US dollars,” Lane said.
Alan added: “We don’t lend against any of these other symbols and so we feel very good about that portfolio.” he highlighted that the third quarter’s $300 million in outstanding bitcoin-secured loans was backed by roughly $770 million in bitcoin, helping the company survive and grow positively.
Although no further SEN listings were announced, Alan describes the SEN Foundation as supporting emerging markets based on the ability to efficiently exchange and manage with correspondent banks and foreign exchange trading partners.
Silvergate share price
Following the FTX crash, Silvergate stock prices have been observed to fall by 23%, at press time Silvergate stock is trading at $27.90.
If we compare the income statement of Silvergate in Q2 and Q3 of 2022, we see a serious impact on the company’s net margin.
In Q2, Silvergate’s revenue was around $80.80 million, of which net income was $38.60 million, and its profit margin was around 47.78%.
According to Q3 reports from Silvergate, published in September 2022, the company’s profit margin fell in the third quarter of 2022. The profit margin of Silvergate stock fell by about 4 percent compared to Q2 reports.
Andrew is a blockchain developer who developed his interest in cryptocurrencies while graduating. A keen observer of detail, he shares his passion for writing alongside being a developer. His backend knowledge of blockchain helps him bring a unique perspective to his writing
