What happened Shares of Silvergate Capital (NYSE: SI) fell 24.6% in April, according to data from S&P Global Market Intelligence. The crypto-focused bank plunged despite better-than-expected earnings reported during the month as high-growth stocks that had big gains in 2020 were pummeled by fears over rising rates and taxes. Although Silvergate is a bank, it is valued much higher than a traditional lender thanks to its exposure to the booming cryptocurrency space. Image source: Getty Images. So what On April 20, Silvergate reported first-quarter earnings. Revenue of $31.1 million grew 52.4% year over year, while earnings per share of $0.55 grew 189% year over year. Both figures beat expectations. Silvergate seemed to hit an inflection point in its crypto exchange trading on its SEN platform, as well as in crypto-related deposits and its new SEN leverage product, which issues loans based on its clients' cryptocurrency holdings held at the bank. Metric QoQ Growth YoY Growth Digital currency customers 13.9% 29.9% SEN transfers 181.3% 856.9% Transaction revenue 86.8% 317.6% SEN leverage loans 138.2% 1,472.0% Data source: Silvergate Capital. Chart by author. QoQ = quarter over quarter. YoY = year over year. Despite these booming growth numbers, Silvergate still fell hard. The reason is likely concerns over inflation and higher rates, along with concerns over hikes in the top capital gains rate. All of those factors together likely led to investors selling off huge winners that came into the month selling at frothy multiples. After all, Silvergate surged a whopping 1,400% over the 12-month period ending March 31 and entered the month trading at an 85 P/E ratio -- far higher than a typical bank, which trades in the low to mid-teens. Therefore, it was highly vulnerable to any sort of rotation or profit-taking. SI 1 Year Total Returns (Daily) data by YCharts Now what Silvergate has a lot of exciting potential as a first-mover in cryptocurrency-related institutional banking, so it should probably trade at a higher valuation than a typical bank. Still, remember that Silvergate isn't a cryptocurrency itself, but a bank that makes money on loans and transaction fees. Therefore, investors should take care to think about the company's actual earnings power rather than merely riding crypto-price momentum. After its April plunge -- which has continued into May -- Silvergate now trades at a more reasonable 37 times this year's earnings expectations. But that P/E ratio is still much higher than a typical bank, so Silvergate will have to show continued strong earnings and innovation to turn this negative momentum around. 10 stocks we like better than Silvergate Capital CorporationWhen investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.* David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Silvergate Capital Corporation wasn't one of them! That's right -- they think these 10 stocks are even better buys. See the 10 stocks *Stock Advisor returns as of February 24, 2021 Billy Duberstein has no position in any of the stocks mentioned. His clients may own shares of the companies mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.Source