Silvergate Capital (SI) witnessed worse than expected deposit outflows in the fourth quarter and the financial impacts of these outflows will have implications on long-term profitability, JPMorgan (JPM) said in a research report on Friday.

JPMorgan downgraded the stock from loverweightr to lneutralr and slashed its price target for the company to $14 from $30. Bank of America also downgraded the crypto bank to "underperform" while Cannacord, Wells Fargo and Morgan Stanley cut their price targets on Silvergate.

Separately, ratings agency Moody's downgraded Silvergate's long term deposit rating to Ba1, or junk status, based on the announcement of significantly decreased crypto deposits, large losses to meet its liquidity needs, impairment of technology assets and announced layoffs.

lThese events highlight Silvergate Bank's significant operating challenges, in particular the profitability, funding, and liquidity risk associated with amplified deposit volatility driven by uncertainty in the crypto currency market and the bank's narrow business model,r said Sadia Nabi, Vice President, Senior Analyst in Moodyrs Financial Institutions Group.

Shares of Silvergate Capital fell over 10% in premarket trading to $11.21, having already fallen nearly 43% on Thursday following the results.

lWhile the challenging backdrop for the crypto settlement business was a factor in the worse than expected results being released, we also believe that concerns voiced by short-sellers (on Twitter) likely also contributed to Silvergaters customers withdrawing deposits from the platform at a greater than anticipated level,r JPM analysts led by Steven Alexopoulos wrote.

JPM says it expects deposit balances to normalize to late 2020 levels, but cautions that they could normalize at much lower levels as crypto customers have moved to a lrisk-offr position and are sitting on the sidelines.

Still, the bank remains lbullishr on blockchain technology, the note added.

Read more: MicroStrategy, Marathon Digital Shares Fall Amid Crypto Bank Silvergaters Woes

UPDATE (Jan. 6 14:52 UTC): Added Moody's downgrade and details, as well as that of other investment banks.