Asset Bubbles

An asset bubble occurs when the price of an asset—such as real estate, stocks, or cryptocurrencies—rapidly increases beyond its intrinsic value due to high demand and speculation. This surge is driven more by investor optimism and market hype than fundamental factors. Eventually, when confidence wanes or expectations change, prices can sharply fall, causing significant financial losses for investors. Bubbles are often identified by their rapid growth followed by a sudden collapse, highlighting the importance of careful analysis and caution in investment decisions.