What happened
The cryptocurrency sector as a whole is having a bad day today, but the Crypto.com Coin (CRO -5.22%) had other plans. The token showed a 24-hour gain of 21.4% at 12:20 p.m. ET on Wednesday, as the Crypto.com company made a move more commonly associated with traditional businesses.
So what
I'm talking about Crypto.com's sponsorship of the sports arena currently known as the Staples Center. The privately held, Singapore-based cryptocurrency trading specialist is forking over $700 million for a 20-year naming rights contract, according to many independent reports. The name change will take effect on Christmas Day, with the hometown Los Angeles Lakers hosting the Brooklyn Nets in a high-profile holiday showcase for the National Basketball Association.
The Crypto.com token is a cryptocurrency, not a stock, so it might seem strange that the token is moving on the type of news that would normally affect stock market assets. But this token plays many crucial roles in Crypto.com's actual operations, so it stands to reason that the cryptocurrency should gain in value as the underlying business operation grows. This sponsorship should certainly drive more attention to the Crypto.com platform, which may translate into positive financial results.
Image source: Getty Images.
Now what
This is not Crypto.com's first rodeo when it comes to seeking name-brand recognition through big-name sponsorships. The company already has sponsorship deals with the Formula One car racing circuit, the Montreal Canadiens hockey team, the Ultimate Fighting Championship martial arts league, and world-class soccer clubs in several countries. You may also have seen superstar actor Matt Damon promoting Crypto.com in TV commercials -- a marketing push with a budget north of $100 million.
The Crypto.com token has now gained 688% in 52 weeks, comparable to Ethereum's (ETH -2.33%) 780% gain over the same period but far behind the functionally similar Binance Coin (BNB -5.07%), which has posted a 1,950% one-year return. Like the Crypto.com Coin, Binance Coin helps the associated crypto-trading platform perform many of its core functions.
It's hard to say exactly how successful Crypto.com's sponsorship plans might be, because the playbook for cryptocurrency promotion is still being written. Today's big price jump made up for the sectorwide panic that hit essentially every cryptocurrency token earlier this week. The renamed Staples Center will surely remind investors to keep an eye on where this company and its in-house cryptocurrency is going next.
