Silvergate CEO Sees Short-Term Pain For Crypto, Remains Bullish On BTC

The Silvergate CEO Alan Lane sees some short-term pain for the crypto markets but still remains bullish on Bitcoin while his bank, posted strong second-quarter earnings and outperformed its crypto peers because of strong risk management so let’s see what else he had to say about today’s crypto news.

The bear market is hitting all corners of the digital asset industry but it is not done yet and could see some more pain in the next few quarters as per the Silvergate CEO. The crypto sector might still experience a few areas of pain for exchanges and crypto funds in the next few quarters but at some point, all of this will be done and we will be waiting for what is the next catalyst as Lane said.

Investors should not compare the current price slides to a previous one given the global economic reset as digital assets all dropped with macro trends including the rising rates and the inflationary pressures. The shares of Silveragate are down by 42% and they jumped 33% in the past week. The VanEck Digital Transformation ETF that holds crypto stocks including Coinbase and Marathon Digital both dropped but then again increased. The rising rates and the recession fears hurt the global equity markets with stocks being riskier. The NASDAQ Composite index retreated about 25% year to date.

Given the crypto downturn, analysts anticipate a weak quarter for crypto companies from exchanges to miners but the bank’s second-quarter earnings bucked the trends. The Silvergate Exchange Network is a fiat on-ramp for BTC markets, posted 34% in the US while net income increased 85% year over year. Lane said that the way Silvergate avoided the pitfall of the bear market` by doing what they know:

 “We really try to stay in our lane and not chase the latest fad, but really just focus on what we do well, and essentially just solving problems for our customers.”

The investment bank Canaccord Genuity thinks that risk management is a key contributor to Silvergate’s positive earnings results. Canaccord analyst Joe Vafi said:

“What perhaps was the biggest long-term positive for the story was a risk management program that resulted in no loan writedowns, despite significant crypto spot price volatility and some default contagion across the broader ecosystem.”

Vafi expects Silvergate to double its earnings in the next few years due to the growth drivers that the company is embarking on. Amid the recent collapses of a few over-leveraged crypto-linked financial institutions, Lane remains positive about using Bitcoin:

“We’re absolutely still interested in lending against bitcoin. We believe that is some of the best lending we’ve ever done, and we want to continue to grow that.”