One of the hottest cryptocurrencies on the planet right now is Cronos (CRO 6.80%), the native token of the cryptocurrency exchange Crypto.com. Seemingly out of nowhere, CRO is up almost 90% during the past 30 days, and now ranks among the 20 most valuable cryptocurrencies, with a market cap of $9 billion.
The rapid ascent of the Cronos token is a direct result of the Trump administration's pro-crypto policies -- but not in the way you might expect. Let's take a closer look at what's going on with Cronos, and what it means for you as an investor.
The transformation of Trump Media into a crypto company?
When the Trump administration came into office in January, the widely held expectation was that it would help to pave the way for rapid growth within the crypto sector, primarily by reducing the regulatory hurdles that have plagued crypto for years. But nobody could have imagined that companies run or controlled by the Trump family would soon be taking positions in specific cryptocurrencies, or helping to promote the interests of certain cryptocurrency companies.
Strangely enough, that's what appears to be happening. It started with the launch of the Official Trump meme coin in January, and has gained momentum since then. Companies owned or controlled by the Trump family have launched new cryptos, invested in cryptocurrencies such as Bitcoin, and helped to promote the interests of crypto companies viewed as being friendly to the Trump administration.
Image source: Getty Images.
Case in point: Trump Media & Technology Group (DJT 2.63%), a company with Donald Trump as the majority shareholder, made headlines this summer with plans to become a Bitcoin treasury company. In other words, it plans to invest aggressively in Bitcoin at a time when its core business, the Truth Social media platform, is struggling.
Earlier this year, Trump Media & Technology Group also announced plans to launch new exchange-traded funds (ETFs) tied to specific cryptocurrencies. And it also announced the coming introduction of a new decentralized finance (DeFi) platform for Truth Social users called Truth.Fi. Yes, it seems hard to believe, but Trump Media & Technology Group is apparently transforming into a crypto company.
The latest unexpected move by Trump Media & Technology Group is to create and fund a new publicly traded company called Trump Media Group CRO Strategy, which will trade under the ticker symbol MCGA. Instead of becoming a Bitcoin treasury company like Trump Media & Technology Group, the new company will be a CRO treasury company.
Simply put, its primary purpose will be to accumulate as much Cronos as possible, as quickly as possible, using money from outside investors. According to early estimates, as much as $6.4 billion might be used to purchase CRO tokens.
Making the move even more interesting is an agreement between Trump Media and Crypto.com to invest in each other's businesses. For its part, Trump Media will buy $105 million worth of CRO for its balance sheet, while Crypto.com will buy $50 million in Trump Media stock. In theory, this should lead to the price of Trump Media increasing in value, as well as the price of CRO increasing in value.
This is how you get 90% returns in 30 days
And that's exactly why Cronos is up an eye-popping 90% during the past 30 days. The cryptocurrency appears to have the implicit support of the president himself, and is exactly the sort of bargain-priced cryptocurrency that can explode in price overnight. Even with the huge run-up in price, CRO still trades for less than $0.30.
Just keep in mind: The primary reason you would want to own CRO is if you are doing business with Crypto.com, which bills itself as "America's premier crypto trading platform." That's because CRO is the token that powers the Crypto.com blockchain ecosystem. If you have a crypto trading account with Crypto.com, then it might make sense to own CRO, so that you can take advantage of Crypto.com's full range of products and services.
Unfortunately, the most likely use for CRO right now is pure speculation. If you take a look at a long-term chart of CRO, it's possible to see this quite easily. For more than three years, the price of the CRO token stagnated. So now that the price of CRO has started to pop, the speculators are piling in.
What happens next?
Maybe I'm too skeptical, but I'm not ruling out a repeat of what happened during the previous crypto bull market rally of 2021-2022. Amid a wave of crypto euphoria in 2021, the price of CRO absolutely skyrocketed. About that time, Crypto.com was putting its name on sports arenas, and doing everything possible to promote cryptocurrency to a mainstream audience. The run-up in price seemed to make sense.
But then came the "Crypto Super Bowl" of 2022. Remember that controversial Matt Damon "Fortune Favors the Brave" Super Bowl commercial for Crypto.com? Soon after the Super Bowl, the price of Cronos tanked. From an all-time high of nearly $1, it fell all the way to $0.10.
I'm not saying the same thing is going to happen again with the Cronos token, but I have a queasy feeling. The rise in the price of CRO, after years of stagnation, almost seems to be too good to be true. Maybe it is. That's why I'm staying away for now.
