While the naming rights are symbolic of how far crypto progressed in 2021, they are not incentivized to invest in Crypto.com USD.
Crypto.com Coin Naming Rights Paid for Itself
More than a month before Crypto.com took possession of the signage at the former Staples Center, Bloomberg reported on November 22 that the $35 million a year Crypto.com would pay over 20 years ($700 million total) had already paid for itself.
The Cryto.com Coin rose 55 percent in value as a result of the news, which was officially revealed by Anschutz Entertainment Group, the arena’s owners. It now has a market valuation of $18 billion, making it the 13th-largest cryptocurrency.
According to Meltem Demirors, chief strategy officer of CoinShares International Ltd., the accompanying PR doubled the token price and resulted in a market cap increase of $9 billion. Bloomberg reported that the dealer paid for itself 13 times over. It’s tough to untangle token distribution and who profited, but it’s a brilliant token marketing approach!
The Crypto.com Coin is now trading at $0.5193, down from a high of $0.9678 on November 24. That’s a 46 percent drop in a month. As a result, its market capitalization has plummeted to $13.1 billion, putting it in 16th place, down three spots from late November.
It’s safe to state that any gains made following the November announcement will have vanished by 2022. Investors looking to profit from the CRO-USD appreciation should look for other reasons to buy the Cryto.com Coin.
One of them is paying $700 million for naming rights. It doesn’t matter how enticing it is.
How to Invest in Crypto.com
CRO-USD was the subject of my initial commentary in early December. I recommended that investing in Crypto.com as a company was a better option than investing in its coin.
The Crypto.com Coin, on the other hand, passed my utility sniff test.
I haven’t seen enough to justify buying CRO-USD. Instead, I’m still focused on business. After all, Coinbase Global (NASDAQ: COIN) made $406 million on $1.24 billion in net revenue in the third quarter. That’s a net profit margin of 33%.
Over the last four quarters, Coinbase has earned nearly $3 billion in net income on $5.36 billion in revenue, for a net margin of 55%. While profits and revenues may be erratic due to fluctuations in cryptocurrency values, there’s no denying that they’re appealing to investors.
From a financial standpoint, Crypto.com is also performing well.
The Bottom Line
Although I am still a skeptic about cryptocurrencies, I find their evolution fascinating to follow.
The $700 million naming rights deal for Crypto.com in Los Angeles will help the Singapore-based crypto exchange gain popularity in the United States. So, from a business standpoint, I can see why it made the decision. In terms of the Crypto.com Coin, I don’t know how the name of the Los Angeles Lakers’ arena has anything to do with its future price potential.
There’s simply not a compelling rationale to invest in CRO-USD.
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