EXPLAINED

The First largest Financial Bubble- Tulipmania



This chronicle talks about Tulip Mania.


You might have heard people calling cryptocurrency, a new Tulip Mania

Before we begin, I would like to share a fascinating fact about Tulipmania!


Back in the morning, I found that though most of us know it as a Bubble, many of us don't know that there is another school of experts who believe Tulip Mania is a myth. So, Is Tulip Mania a myth, well it's still a mystery!


Let's jump back to the story of Tulipmania.


We can easily remember the story of Tuplimania, from what we study in a product life cycle. Like every product, Tuplimania had 4 stages:


1. Introduction Phase (1550- 1610): In this stage, Tulipmania got introduced in Europe from Turkey


2. Growth Phase (1610-1633): In this period, TulipMania started growing. People started using Bulbs of the variety Tulipe Brasserie as dowry. Professionals and experts started trading tulips as a status symbol.


​3. Maturity stage (1633-1636): As the poor and middle class people also entered trading of Tulip, craze heightened, but the excitement was shortlived as Tulip Market reached its maturity by the end of 1636 and early 1637.


4. Decline stage (1637): In this stage, tulip market crashed and price index declined to a level unimaged by anyone at the time and Tulipmania emerged as the first largest financial bubble.



Lets, Look at the timeline of Tulipmania:






Quantifying the theory for a better understanding, we plot a price index chart.



We find that:


1. The price index have moved from 8.9 to 202 in 4 months (Signifying the period of Tulipmania craze).


2. The Price index suddenly went down from 202 to 145 in a matter of days and the market crashed


3. In the month of May, the price index was only 11


Hence, with this, we come to an end of our first narrative, in Epic Tales. We will soon come up with even more interesting cases in Finance.


Until then...


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Take Care:)