The cryptocurrency market is known for its volatility, but even with the regular ups and downs, some tokens truly stand out when it comes to making big moves.
One of those tokens is $CRO, the native crypto of Crypto.com’s Cronos blockchain, which just so happens to hit the news quite a bit. Just over the past 24 hours, $CRO has soared by 40% to now sit at 10 cents with a market cap around $2.6 billion. This is undoubtedly related to a new token issuance proposal that is making its way around the ears of both investors and the crypto community at large. The proposal states that Cronos is reissuing 70 billion $CRO tokens, which had previously been burned back in February 2021. It’s all part of a larger scheme by the company to build a strategic reserve, which is something that’s gaining a lot of traction as a concept in the crypto market.
The Token Issuance Proposal: A Key Driver for the $CRO Surge
The recent surge in $CRO’s price can be attributed to the excitement surrounding Crypto.com’s proposal to reissue 70 billion $CRO tokens. These tokens were originally burned two years ago as part of a token reduction strategy to reduce the overall supply of $CRO and create scarcity, a tactic commonly used in the cryptocurrency market to increase the value of a token. Now, Crypto.com is taking the opposite approach by restoring the total supply of $CRO to its original 100 billion tokens. This decision has generated considerable interest in the market, and in response, the price of $CRO has rallied.
🔥The concept of strategic reserves is heating up, with CRO surging nearly 40%
On March 3, $CRO surged nearly 40%, now priced at $0.10 with a market cap of $2.6B, likely driven by the new token issuance proposal.https://t.co/k5dkpU1Wvg’s Cronos project plans to reissue 70B… pic.twitter.com/yAT8YpnhXS
— Followin (@followin_io) March 3, 2025
New tokens will be issued as part of a strategic reserve that will lock up these assets for the period of 10 years. They will be released in a linear unlock over the first 10 months of their existence, with the first monthly unlock happening 1 month after they are issued. They will lock up for 10 months total and then be spaced out in terms of timing, and never in large quantities at once, and that is the main way by which the reserve and unblocking process is supposed to not harm $CRO too much.
For many investors, a strategic reserve is very appealing indeed. When you stake $CRO, part of what you are doing is locking up some of its total supply for a fairly long time. By doing this, you are giving a reliable signal that you are in it for the long haul, that you are not in some sort of get-rich-quick scheme where you unload as soon as the thing starts taking off.
About a week ago, the company announced that it was going to start unlocking some of the newly issued $CRO that you might have staked back in 2020 or 2021. Still with me? Good. Because there is hanging on this announcement the question of what is going to become of the market for $CRO now that it is no longer a staking yield, but rather much more like a cash settlement to a futures contract.
The Growing Popularity of Strategic Reserves in the Crypto Market
Strategic reserves is a not totally novel idea in the crypto world, but it’s gaining traction. In what might be the first move of its kind by a cryptocurrency service provider, Crypto.com has gone and locked up in reserve some $10 billion worth of its own native cryptocurrency, the CRO (Crypto.com Coin). When you buy something using CRO, the company’s argument goes, you are helping to ensure that CRO has a long-term future. Because locking up $10 billion in reserves is probably not something you can pull off unless you’re a company with a vault full of cryptocurrencies.
There are many possible advantages to having strategic reserves. For one thing, they assure us long-term holders that a substantial part of the token supply is safe and sound, not being traded this way or that, and that’s good for market stability. It’s much better, for example, if large holders (a.k.a. “whales”) can’t suddenly flood the market with a lot of sell orders. And it’s also much better if they can somehow manage their token supply more predictably. That is, these reserves could help avoid any sort of unpredictable market flow from the token’s supply.
This recent development gives $CRO holders reason to feel optimistic, as it indicates that Crypto.com is adopting a proactive and sensible approach to its tokenomics. Furthermore, the reintroduction of the burned tokens, through the strategic reserve, could create a short-term sense of scarcity, which is often a “powder keg” for triggering price increases. In summary, there are two reasons to see this as a potentially positive development.
What Does the Future Hold for $CRO?
Undoubtedly, the immediate effect of the token issuance proposal on $CRO’s price is good, yet it might not be all that it seems. As good as it looks, can we really expect this price to hold up? Sure, the $CRO price reaching an all-time high has to be seen as an accomplishment, yet as they say: what goes up must come down, at least in the short term. Even so, one has to look at the token issuance proposal’s price effect and consider the other side of price effects: the long-term price effect.
A major factor that could influence the success of this initiative is the demand for $CRO and the Cronos blockchain. Crypto.com has moved strongly to expand not only its set of offerings but also its user base, with the Cronos blockchain serving a not-so-small range of decentralized finance (DeFi) applications, NFTs, and other services that run on the blockchain. If Crypto.com can keep pushing the adoption of $CRO and the use of its ecosystem, then the value of this token should trend up over time.
Conversely, the future of $CRO will significantly be decided by market conditions, competition from other blockchain platforms, and other large-scale economic factors. The crypto market is infamously unstable, and while a strategic reserve is a nice idea, there’s no reason to think that $CRO isn’t just riding an upward wave that it will inevitably come down from.
To conclude, the recent surge in $CRO’s price is inarguably a result of Crypto.com’s clever maneuver of reissuing 70 billion tokens that had been held in vesting and staking contracts as part of its strategic reserve. This has generated quite a bit of hype in the investing community, with the potential to enhance both long-term stability and scarcity for $CRO, as the token now has even more potential to serve both use cases. And because this announcement is just the tip of the iceberg, with even more good news supposedly to come, excitement about the overall Cronos ecosystem seems to be at an all-time high.
Disclosure: This is not trading or investment advice. Always do your research before buying any cryptocurrency or investing in any project.
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Source: https://nulltx.com/cro-sees-a-40-surge-amid-strategic-reserve-announcement-whats-behind-the-rally/