According to the wikia article for Kimblee...
In the manga, Kimblee uses this array to transmute ordinary matter into explosives by clapping his hands together. By combining the contradictory symbols of the sun and moon, gold and silver, water and fire, the Crimson Lotus Alchemist creates an unstable imbalance of energy in whatever matter he touches, causing it to explode violently.
The trivia section below then states:
The kanji that makes up Kimblee's State Alchemist name in Japanese (紅蓮 Guren) is a source of contention among translators. While the word "Guren" can be translated as "Crimson", the kanji (紅蓮) suggests another possible translation that reads "Red Lotus" or "Crimson Lotus". As the Crimson Lotus is often used as symbolism for fiery explosions, it is most likely that Red Lotus or Crimson Lotus is Kimblee's true name despite Guren having been translated as Crimson in the subtitles of the first anime series and both English dubs.
So the answer appears to be that because his alchemy is know for large, fiery explosions, he was named after the Red Lotus, which can symbolize the same thing.