Silvergate Capital is poised to be a long-term winner in the crypto industry even as the the end case for the digital technology remains murky, according to Wells Fargo. Analyst Jared Shaw initiated coverage of the stock with an overweight rating, saying that Silvergate was “carving out a niche role” as an important bank in the crypto ecosystem. “While crypto’s role in the financial ecosystem is still up for debate, what cannot be ignored is the continuous adoption of crypto and blockchain-enabled products by some of the largest global institutions. … Customer growth is the biggest driver of deposits at SI, which should drive much of the bank’s near-term profitability, as 77% of assets are securities (55% floating) and the loan book is also heavily floating-rate,” Shaw wrote. Crypto has been hit hard in recent months as the prices of major digital currencies have fallen 60% or more from the high point in late 2021. Silvergate’s stock has dropped 50% this year. However, Shaw said in the note that “much of the bear-case is priced in at current levels” and set a price target of $120 per share, which is 62% above where the stock closed on Friday. To be sure, bitcoin fell below $24,000 on Monday morning after trading above $30,000 on Friday. That drop was so steep that it brought Wells Fargo’s downside scenario for Silvergate into play. “With shares still trading with a high correlation to BTC, we would view further declines in BTC prices to drive downside from current levels. If BTC fell to $20k, we est EPS would decline ~20-35% in ’22-’23 vs. our base case and SI would trade more in line with mid-cap bank peers at ~12x ’23E EPS, or ~$60,” Shaw wrote. — CNBC’s Michael Bloom contributed to this report.