Signature Bank shares dropped as much as 32% on Friday and were halted amid a sell-off in bank stocks that continued for a second day.
Signature, one of the main banks to the cryptocurrency industry, was last down by 10%.
The move followed a big day for its crypto banking peer Silvergate Capital, which announced earlier this week that it would liquidate its bank. Its losses deepened Thursday after shares of SVB Financial, whose Silicon Valley Bank lends to tech startups, announced a plan to raise more than $2 billion in capital to help offset losses on bond sales.
The troubles at Silicon Valley Bank rippled across bank stocks. First Republic Bank, PacWest Bancorp, Western Alliance Bancorp were among the other names whose trading was for volatility.
Signature Bank has said it has minimal exposure to crypto, but its need to recapitalize on the heels of the Silvergate event has linked the two events in some people’s minds.
Valkyrie chief investment officer Steve McClurg said the Signature Bank was already hurting on the back of Silvergate’s losses, which now total almost 50% for the week. Its Friday losses are a spillover effect from the Silicon Valley Bank woes, he added.
Ed Moya, an analyst at Oanda, emphasized Signature is caught in the middle of both narratives.
“Signature Bank is getting hit with a one-two punch as concerns grow that any crypto-related bank could be in danger and as financial instability concerns grow for parts of the banking sector,” he said. “There are only a handful of publicly traded banks that have crypto exposure and lots of traders are rushing to bet against them.”