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Silvergate, Signature and Customers Bancorp gobbled up deposits from crypto companies shunned by bigger banks. Now, they are dealing with the bust. The plunge in crypto prices this year has taken the banks on a wild ride. At Silvergate, deposits swung by $5 billion in the second quarter, a nearly unheard of move for a bank of its size, before ending basically flat at $13.5 billion.
olatility also has seeped into the banks’ stocks, which now trade more like crypto firms than their staid banking peers. The shares of Silvergate and Signature both doubled last year when the market was booming, while Customers stock more than tripled. Silvergate is down nearly 30% this year, while Signature and Customers are off almost 40%. The broad Nasdaq Bank index has fallen 8%. Big banks have been snatching market share from small banks for years, especially when it comes to deposits. That has left smaller banks looking for growth in places where the big banks aren’t. With crypto, the difficulty of the strategy is evident.
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