Bitcoin enthusiasts are in the middle of an existential crisis. Since its mid-April high, the price of Bitcoin has tumbled by as much as 47%. Meanwhile, China — where up to three-quarters of the world’s supply comes from — is curtailing mining and trading. And how solid a rock is the world’s largest cryptocurrency when a few cryptic tweets from Tesla Inc. founder Elon Musk can send it wobbling? Institutional investors have been heading for the exit — for gold.
But true believers take heart! Other investments require even greater leaps of faith. You can do a lot worse than Bitcoin.
Bitcoin has a simple concept: It is a digital token with a finite supply that’s been around for 14 years. By comparison, in the traditional world of stocks and bonds, you’ll be hard pressed to find assets that have such investor enthusiasm and such a clear story to sell.
Consider the electric vehicle craze. QuantumScape Corp, a $12.3 billion market cap EV battery maker that counts Volkswagen AG and Qatar Investment Authority among its major shareholders, went public via a reverse merger with a SPAC last November. This stock has done worse than Bitcoin, losing almost two-thirds of its value this year. The reason? It’s too mysterious.
QuantumScape made some bold claims: That it could extend the range of electric cars by as much as 50% while substantially reducing charge time for a long drive to just 15 minutes. So far, the breakthrough promised is backed only by limited preliminary data. Secrecy is standard practice in battery development: The company would not even name its scientists in an interview with Bloomberg for fear of poaching by rivals. Chief Executive Officer Jagdeep Singh said he “never understood why [getting a third-party lab to test our cells] is considered more objective.” Mass production is nowhere in sight for this zero-revenue start-up, whose operating losses have been on the rise.
