The latest turmoil in crypto could hurt Silvergate Capital as investors lose confidence in the bank’s chances of getting a stablecoin approved, according to Bank of America. Analyst Brandon Berman downgraded the crypto bank stock to neutral from buy and lowered his price target to $37 from $72. The new target represents a 6.7% upside for the stock, which is down 77% this year. Crypto took a hit Wednesday – with bitcoin reaching a low not seen since 2020 – after Binance backed out of a deal to acquire rival FTX over “mishandled customer funds and alleged U.S. agency investigations.” The deal was previously seen as a way to solve a “liquidity crisis” facing FTX. “After 3Q22 earnings, we posed the question: ‘Is the worst behind them?,'” said Berman in a note to clients, referencing the company’s third-quarter earnings release in mid October. “We were wrong.” The situation is a “black eye on the broader crypto market,” Berman said, that could prompt investors to exit the market and refocus lawmakers temporarily away from legislation on stablecoin, which is a term used to describe cryptocurrencies. That could delay Silvergate’s pilot launch of its own stablecoin, which was already pushed back from a previously expected 2022 launch. Berman said Silvergate launching a stablecoin is a key part of his optimism about the stock. He said the stock’s new price target reflects the diminished likelihood of a stablecoin contributing to the company’s expected profitability in 2024. Berman said institutional clients could move deposits from FTX to Silvergate or a competitor. He said Silvergate is not expected to incur loan losses or forced liquidations from the move or other major events in the crypto world. However, concerns over delays are only intensified as Berman sees competitors making progress and diminishing Silvergate’s advantage from being first in the space. He specifically pointed to Circle Internet Financial, which got approved by Singapore’s central bank to provide digital payment token products and transfer services. — CNBC’s Michael Bloom contributed to this report.