Economic bubbles occur when the price of an asset, such as stocks or real estate, is driven up artificially and becomes disconnected from its underlying value.
Five Biggest Economic Bubbles in History
- Tulip Mania (1634-1637): A financial bubble based on the price of tulip bulbs affected the Netherlands in the early 1600s. Prices rose sharply before abruptly plunging, leaving numerous investors with worthless bulbs.
- The South Sea Bubble (1720): An economic bubble developed in England based on the South Sea Company, which had been given a monopoly on trade with South America. Speculators drove up stock prices before they crashed quickly.
- The Dot-Com Bubble (1995-2000): This bubble was driven by speculation around internet companies. Stock prices rose sharply before crashing due to overvaluation and fraud.
- The Housing Market Bubble (2007-2008): Easy access to credit and low interest rates caused housing prices to skyrocket before crashing along with global stock markets.
- Cryptocurrency Bubble (2017-2018): The surge in cryptocurrency values attracted investors who pushed prices higher before a collapse led to large losses for many participants.