A bubble describes a market condition in which the price of an asset or an entire market rises far beyond its intrinsic or fundamental value, driven by speculation, herd behavior, and euphoric sentiment. Bubbles are characterized by rapid price appreciation that becomes unsustainable, followed by a sharp crash or correction when the bubble 'bursts.' Historical examples include the Dutch Tulip Mania of 1637, the Dot-com Bubble of 2000, and multiple cryptocurrency boom-bust cycles. Bubbles are typically only confirmed in hindsight after prices have collapsed.
Example
“Many analysts warned that the 2021 NFT market was a bubble, and prices of most digital collectibles eventually crashed by over 90% within two years.”