E.G. the dot com bubble. The 2008 housing market bubble. And the recently talked about NFT bubble.
In: Economics
At it’s most basic, a bubble is when people buy assets not based on sound valuation but on the belief they’ll be able to find somebody who will pay even more than they did. They don’t care that the house should only be worth $500k, they’ll pay $700k because they’re “certain” they can sell it for $900k in a few months.
At some point, something snaps enough people back to reality that prices begin to fall, then panicked owners scramble to sell, causing a rapid price drop.
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