09/08/2026
In 1637, tulip bulbs were selling for more than the price of a house in Amsterdam.
The most prized varieties, rare tulips with unusual color patterns, commanded prices that would seem insane by any rational measure.
And yet ordinary people were mortgaging their homes and abandoning their jobs to get in because the momentum was real. The wealth that was being generated was real, too.
Then, in February of that year, the market collapsed. Almost overnight, buyers stopped showing up.
Prices that reached extraordinary heights fell to nearly nothing, and bulbs that sold for the equivalent of a craftsman's annual salary were suddenly worth what you'd pay for a vegetable.
The tulip mania became a cautionary tale about speculative excess.
However, this lesson isn't really about tulips. It's about a specific and recurring dynamic in human markets: the moment when price becomes completely detached from value.
This dynamic has repeated itself time and again over the 400 years since tulip mania. The railroad stocks of the 19th century and the dot-com companies of the late 1990s are just a few examples.
More recently, two collections of non-fungible tokens (NFTs) sold individual JPEGs of cartoon rocks and characters for millions of dollars. One Cryptopunk sold for almost $12 million, and a "digital rock" sold for $1.3 million.
That's right: Products with no physical form, no utility, and no underlying business sold for millions. Lots of profit for the original creators, but not so much for the "greater fool" who was the last buyer to click "buy."
Inevitably, these buyers got caught up in the same enthusiasm that swept up Dutch merchants four centuries earlier. They believed that momentum was the same thing as value, and that prices would rise indefinitely.
The Cryptopunk and EtherRock collections went on to lose the majority of their value.
Next time you see prices rising for no apparent reason, buyer beware.
