As digital currencies become more and more accepted, there are certain sectors that have the potential to gain massively from this trend. Banks that adopt and recognize the power of this innovation are poised to profit handsomely. In this industry, Silvergate Capital has proven itself to be a true leader as it provides the financial services needed for the emerging digital currency space. For instance, the Silvergate Exchange Network enables customers to send funds between their Silvergate accounts and their crypto accounts with Coinbase, Gemini, Binance, and other exchanges. Silvergate's fundamentals are truly astonishing. With four quarters of triple-digit earnings and five quarters of accelerating sales, SI is delivering results very few companies are capable of.
When I look at SI’s chart, the first thing that captures my eye is the massive move from the fall and winter of 2020 which rocketed Silvergate more than 800%. That type of sustained trend is not caused by your cousin Mike or “Aunt Suzzy” buying. That is institutional buying coming in to take a position. Throughout this year, Silvergate Capital has mostly held above its' 40-week line which is something I always like to see. Its’ base is much deeper than I would like, but it has been tightening up recently which is an excellent sign. Strong moves in Bitcoin and Ethereum as well as Coinbase are also positives.
After the strong break above $170 in early November, SI has been consolidating in a very constructive manner. I will be monitoring it very closely in the coming weeks to see if I can get an entry point on either on a pullback to major support or via a breakout.
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