Why Cronos Is Skyrocketing Today

Source The Motley Fool

Key Points

  • Trump Media and Crypto.com are creating a new entity that will acquire significant amounts of Cronos.

  • The entity will go public via a SPAC merger and trade under the ticker MCGA.

  • 10 stocks we like better than Cronos ›

Cronos (CRYPTO: CRO) is flying higher on Wednesday, up 20.6% in the last 24 hours as of 3:49 p.m. ET. The spike comes as the S&P 500 and the Nasdaq Composite made modest gains.

Cronos, Crypto.com's digital token, is continuing to rise after it was revealed yesterday that Trump Media & Technology and Crypto.com are teaming up to create a new entity that the companies will take public.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

A new Cronos accumulation company is coming

Trump Media is teaming up with Crypto.com to form a new venture that will go public through a merger with Yorkville Acquisition, a special purpose acquisition company (SPAC). The new entity will trade under the ticker MCGA and will acquire Cronos as a treasury asset.

The deal is structured 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 arrangement, Trump Media will add about $100 million worth of Cronos (CRO) to its balance sheet, while Crypto.com will purchase roughly $50 million in Trump Media stock.

The deal mirrors Trump Media's earlier move to add Bitcoin to its balance sheet, a strategy popularized by Michael Saylor's Strategy. What sets this deal apart is the choice of asset: Instead of Bitcoin or Ethereum -- the typical targets thus far -- Trump Media is moving into Cronos, a far smaller altcoin.

North America lit up at night from space.

Image source: Getty Images

Look for more established projects

Although the announcement sparked a surge of buying in Cronos, I'd avoid the token for now. The deal is likely to bring sharp swings in price, much like the volatility seen in Trump Media's stock. For crypto exposure, Bitcoin and Ethereum remain the safer bets.

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Johnny Rice has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin and Ethereum. The Motley Fool has a disclosure policy.

Disclaimer: For information purposes only. Past performance is not indicative of future results.
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