Tulips, Dot-Coms, and Crypto: A Field Guide to Bubbles
Three centuries, three manias, one familiar shape: a story catches fire, prices detach from reason, and then gravity remembers its job.
In the 1630s, in the Dutch Republic, contracts for rare tulip bulbs began changing hands for sums that, at their peak, rivaled the price of a house in Amsterdam. Buyers weren't purchasing flowers so much as a story — that prices would keep rising, and that someone else would always pay more tomorrow. In February 1637, that story stopped being believed, all at once, and prices collapsed.
Bubbles didn't stop being invented after 1637. In 1720, England's South Sea Company saw its stock price rise roughly tenfold in a single year on promises of trade riches that never fully materialized, before crashing just as fast — a reminder that speculative manias are not a modern or purely financial invention, but a recurring feature of markets wherever a compelling story meets easy money.
The pattern resurfaced almost exactly at the turn of the millennium. Between 1999 and 2000, any company that could plausibly attach '.com' to its name saw its valuation inflate, often with little revenue and less profit to justify it. When the story lost credibility, the Nasdaq lost roughly three-quarters of its value over the following two years, and a generation of investors learned what 'priced for perfection' actually means when perfection doesn't show up.
Cryptocurrency's 2021 boom followed a similar arc with a modern soundtrack: Bitcoin and Ether reached record highs, non-fungible tokens sold for the price of houses, and a wave of retail investors, many trading for the first time, poured in on the belief that this cycle really was different. It wasn't, in the ways that matter: prices fell sharply through 2022, and the collapse of the major exchange FTX that November functioned, for crypto markets, as something close to a Lehman moment — a single failure that revealed how much of the system had been resting on borrowed confidence.
Strip away the century and the asset class, and the same psychology shows up every time: a narrative that outpaces the fundamentals, the fear of missing out pulling in later and later buyers, and a comforting belief that 'this time it's different.' It rarely is. Understanding the shape of a bubble doesn't tell you when the next one will pop — nobody has ever reliably managed that — but it does make the story a little easier to recognize while you're still inside it.