This crypto’s 8% rise today brings its year-to-date movement to 44%

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What happened

One of the hardest hit large cap cryptocurrencies in 2022, Cronos (CRO 10.95%), has taken some very positive steps to kick off this new year. Today’s 24-hour rise of 8.7% from 12 p.m. ET was the latest in a series of rallies to start 2023. Year-to-date, CRO is now up impressively by 44%, outpacing the broader market by a wide margin.

Much of this decision appears to be related to the workforce reductions announced by the company last week. Cronos is the native blockchain of Crypto.com, a centralized crypto exchange that came under intense scrutiny after the collapse of FTX and other centralized players last year. One executive hopes this significant layoff – of 20% of the company’s workforce – will see Crypto.com weather the “confluence of negative economic developments” currently plaguing the industry.

So what

The cost reduction is great, and in many ways this should be bullish for Crypto.com’s transaction-focused exchange business. Because CRO is the native token of the Crypto.com exchange, a significant portion of Cronos’ value is undoubtedly tied to the success of its parent exchange. As a result, with declining volumes, cost containment might be the only strategy available for the crypto exchange right now.

Additionally, with the crypto market appearing to be in a recovery phase (or at least rebounding from last year’s low), centralized crypto exchanges may be in vogue as a high-beta way to play this rally. So, for investors positioning themselves for a near-term rally, the CRO bet has clearly paid off over the past two weeks.

Now what

Now the question is whether this rally can continue for the foreseeable future. So far, 2023 has been a very good year for risky trading. From crypto to highly speculative stocks, investors have been rewarded for taking the risk. We really didn’t see much of that last year apart from a few short rallies.

But this two-week move in CRO may be short-lived. An assortment of macro catalysts could be responsible for a return to the downside, meaning the downside risk appears to be largely beyond investors’ control.

That said, for traders looking for short-term opportunities, there’s a reason why Cronos is currently at the top of the list. I’m not sure this dynamic rally will continue, but it’s certainly fun to watch from behind the scenes.

Chris MacDonald has no position in the stocks mentioned. The Motley Fool has no position in the stocks mentioned. The Motley Fool has a disclosure policy.

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