A crypto bubble occurs when cryptocurrency prices rise significantly above their intrinsic or practical value due to excessive speculation and investor enthusiasm. During a bubble, investors often buy assets primarily because they expect prices to continue rising, rather than because of the underlying technology or utility.
Like historical financial bubbles, crypto bubbles are characterized by:
Rapid price appreciation
Fear of missing out (FOMO)
Heavy media attention
Increased participation from inexperienced investors
Sharp market corrections when sentiment changes