Follies With Tulips & Bitcoins

During the so-called Tulip Mania, contract prices for some bulbs of the recently introduced and very fashionable tulip reached extremely high levels and then dramatically collapsed in February 1637. It was the first reasonably well document asset bubble in history and until now is referred to as the prime example of a market folly.

What this chart indicates is that while technology has advanced greatly over the course of the past 400 years, human psychology has remained the same. Some observers think the rally around the crypto currency Bitcoin might replace Tulip Mania as a reference for a badly overinflated asset bubble prone to burst at any moment.

Then again, there already has been deflation from the peak of a little more than 19,900 to 17,600 dollars per Bitcoin. But nobody knows if the puncture will let the balloon slowly deflate or it will rip it apart, crash landing the Bitcoin.