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This Crypto Stock Was Thursday’s Big Winner Despite Bitcoin’s Plunge

Thursday continued the recent volatility that Wall Street has seen, but for stocks, most of the action was to the upside. Investors seemed ready for a relief rally on hopes that inflationary fears will prove to be short-lived. As of 11:15 a.m. EDT, the Dow Jones Industrial Average (DJINDICES:^DJI) was up 459 points to 34,046. The S&P 500 (SNPINDEX:^GSPC) had gained 52 points to 4,115, and the Nasdaq Composite (NASDAQINDEX:^IXIC) had climbed 137 points to 13,169.

Cryptocurrency markets weren’t as fortunate, with Bitcoin (CRYPTO:BTC) falling 10% to just over $50,000. However, some of the biggest news in the cryptocurrency market was positive, and it helped give a big boost to shares of Silvergate Capital (NYSE:SI).

Why Bitcoin fell

Bitcoin has seen huge gains so far in 2021, and at its best levels, it had more than doubled since the beginning of the year. Yet after reaching nearly $65,000 in March, Bitcoin had largely remained stagnant, as other cryptocurrencies came into vogue.

Bitcoin aficionados also got what many might have seen as a betrayal from Tesla (NASDAQ:TSLA) CEO Elon Musk. He said that Tesla would no longer accept Bitcoin as payment for its electric vehicles, citing the inefficient energy use by Bitcoin mining operations around the world. Musk held out hope that Bitcoin or other cryptocurrencies could find more energy-efficient ways to operate, but given how positive he had been on Bitcoin, the statement came as a slap in the face to some.

Finding a Silver(gate) lining

However, the news wasn’t all bad on the cryptocurrency front. Shares of crypto-expert financial institution Silvergate Capital (NYSE:SI) soared 15% after announcing a major initiative with an entity supported by social media giant Facebook (NASDAQ:FB) that could mark another step toward mainstream adoption of cryptocurrency.

Silvergate announced a partnership with Diem Networks under which Silvergate’s banking subsidiary will become the exclusive issuer of the planned Diem USD stablecoin. Facebook is backing the Diem digital currency project, and in part because of regulatory issues, Diem is planning to move operations to the U.S. from Switzerland.

Facebook has been trying to get into cryptocurrency for quite a while, with initial plans for its Libra coin having hit snags. But the idea behind Diem will be to allow real-time transfer of crypto tokens linked to the value of the U.S. dollar, with plans to register as a money services business with the Treasury Department and hold verifiable dollar reserves to back the tokens.

For Silvergate, meanwhile, the move is just another win in a long list of achievements in helping its business customers adopt cryptocurrency-related strategies. The financial institution has made its reputation lending money to crypto industry borrowers and facilitating handling of crypto assets.

The fact that Silvergate is climbing even as Bitcoin is taking a big hit speaks to the ongoing interest in cryptocurrencies generally. Even if Bitcoin continues to fall, it’s likely that crypto will remain an important element of innovation in financial technology for years to come.

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Photo courtesy of: The Motley Fool

Originally Published On: The Motley Fool

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