Cronos

Cronos (CRO 14.13%) has been one of the hottest gainers in the crypto market over the last week of trading. The company’s share price had risen 100% over the last seven days of trading as of 6:15 p.m. ET Saturday.

Cronos has seen massive gains this week thanks to news that the cryptocurrency will be a key holding for a new crypto-treasury company connected to President Trump that looks poised to launch in the near future. As of this writing, Cronos has a market capitalization of roughly $10.5 billion and ranks as the 17th-largest cryptocurrency by valuation.

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Cronos has seen massive gains following Trump-connected deal

Trump Media announced on Tuesday that it had entered into a partnership that would facilitate the merging of Crypto.com with special purpose acquisition company (SPAC) Yorkville Acquisition to create Trump Media Group CRO Strategy — a new publicly traded company. Cronos is a cryptocurrency launched by Crypto.com, and Trump Media Group CRO Strategy will be purchasing $1 billion worth of the token for its treasury.

Upon completion of the SPAC merger, foundations are place for Trump Media Group CRO to have $200 million in cash and $220 million cash-in mandatory exercise warrants,, and secure a $5 billion credit line. With the new company having access to a large capital base, it’s possible that the large prospective cash pile could be used to purchase more Cronos tokens.

What’s next for Cronos?

The new partnership with Trump-connected companies has been a big bullish catalyst for Cronos and could help push its valuation higher. On the other hand, this doesn’t necessarily guarantee that Cronos will be a strong performer.

For one prominent counterexample, consider the Official Trump cryptocurrency. While the token’s market capitalization surged as high as $5.5 billion shortly after it was launched and endorsed by President Trump on social media, its valuation has now fallen to roughly $1.7 billion. The fact that a crypto-treasury company built around Cronos holdings is seemingly on the horizon may suggest a significantly higher level of institutional support, but it still looks like a high-risk investment.

Cronos (CRO 28.99%) is flying higher on Tuesday, up 24.9% in the last 24 hours as of 1:38 p.m. ET today. The spike comes as the S&P 500 and the Nasdaq Composite are little changed.

Cronos, the token of the major exchange Crypto.com, is jumping after news broke that Crypto.com and Trump Media & Technology are teaming up to create a new company that will acquire Cronos.

Trump Media will add Cronos

The parent company of Truth Social, Trump Media, will partner with Crypto.com to create a new entity that will be taken public via a SPAC deal. The entity will merge with Yorkville Acquisition and be listed under the ticker MCGA. The deal is funded with $1 billion in CRO tokens, $200 million in cash, $220 million in warrants, and an equity line of up to $5 billion from a Yorkville affiliate.

As part of the deal, Trump Media will purchase around $100 million in Cronos to add to its own books, while Crypto.com will buy roughly $50 million in Trump Media stock.

The deal to accumulate Cronos mirrors the same strategy by Trump Media to accumulate Bitcoin on its own books, which the company modeled after a strategy that was pioneered by Michael Saylor’s MicroStrategy (doing business as Strategy). However, this deal is unique in that the target asset is a relatively minor altcoin at least in comparison to Bitcoin or Ethereum, which most other companies have targeted to this point.

Image source: Getty Images.

While the news led to a rush of investors purchasing Cronos, I would stay away from this token for now. There is likely to be a lot of volatility around this deal, just as there is a lot of volatility around Trump Media stock. If you’re interested in investing in cryptocurrency, stick to Bitcoin or Ethereum.