In crypto these days, investors are reaching for bullish signs. But at
a beaten-up crypto bank, a recent rally looks like a stretch. Silvergate jumped 8% Tuesday after
disclosed a 7.2% stake, making the world’s largest asset manager one of its largest shareholders.
The stock move is huge, considering that it may represent only passive fund reshuffling. Silvergate finished the week nearly 39% higher, a performance beating other suddenly hot crypto stocks, such as broker
Investors should look at the technicals—particularly the prospect of a short squeeze at these crypto names. The percentage of Coinbase and Silvergate shares borrowed to bet against them is far higher than average; more than 75% of Silvergate’s shares have been sold short, says financial data group S3 Partners.
This makes both stocks vulnerable to violent runs as short sellers scramble to cover positions by repurchasing shares. The shorts had lost more than $630 million on their Silvergate and Coinbase wagers by Thursday.
Silvergate, a federally insured bank, has been hammered by the digital-asset bust, with its shares down 79% over the past year—even more than
When it was flying high, Silvergate positioned itself as a key service provider to crypto exchanges and investors.
But a market downturn and exposure to toxic names such as FTX forced Silvergate to cut staff and halt dividends. It reported a $1 billion fourth-quarter loss, more than it has made in years. A turnaround would require a crypto rebound, improving regulatory visibility, and increased appetite from institutional investors.
Investors are looking for a turnaround based on fundamentals. So far, they just have technicals.
Simon Property Group,
Take-Two Interactive Software,
report quarterly results.
Chipotle Mexican Grill,
Royal Caribbean Group,
Vertex Pharmaceuticals, and
The Federal Reserve reports consumer credit data for December. In November, total consumer debt increased at a seasonally adjusted annual rate of 7.1%, to a record $4.76 trillion. Revolving credit—mostly credit-card debt—jumped 16.9%, as the estimated $2.3 trillion in excess savings that consumers squirrelled away during the pandemic has dwindled to less than $1 trillion.
reports first-quarter fiscal-2023 results. Shares plunged 43.9% last year, the company’s worst showing since 1974, as investors valued profitability over growth in Disney’s streaming division.
MGM Resorts International,
release quarterly results.
Hilton Worldwide Holdings,
Philip Morris International,
and S&P Global hold conference calls to discuss earnings.
The Department of Labor reports initial jobless claims for the week ending on Feb. 4. Claims averaged 191,7500 in January, 26,000 fewer than in December, and remain historically low. Federal Reserve Chairman Jerome Powell, at the FOMC news conference this past week, cited 1.9 job openings for every unemployed person as something that needs to come into better balance. The reported unemployment rate hit a half-century low of 3.4% in January.
report quarterly results.
The University of Michigan releases its Consumer Sentiment Index for February. The consensus estimate is for a bearish 65 reading, roughly even with the January figure. Consumers’ expectations for year-ahead inflation was 3.9% in January, the lowest level since April of 2021. The Fed has stated that expectations for inflation play an important role in determining actual inflation. Powell recently said that inflation expectations were “well anchored,” meaning that consumers’ expectations for future inflation aren’t sensitive to current inflation.
Write to Jack Denton at email@example.com