alt Hacker NewsThe article suggests people genuinely believed a tulip was, implicitly for the foreseeable future, worth more than e.g. a house. That suggests it was some sort of mania over rationality.
The NFT thing is comparable. I think most of everybody investing understood that they were worthless and that it was a bubble, but there was a remote chance that it wasn't a bubble and even if it was a bubble then you'd still a reasonable chance of making a profit, and even if you didn't make a profit then you'd stand an even more reasonable chance of getting out with fairly minimal losses. Nobody thought there was any remotely high chance of a poor quality rendering of an ape being worth more than a house for the indefinite future. It was just speculation, sometimes poorly and sometimes reasonably measured.
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> Nobody thought there was any remotely high chance of a poor quality rendering of an ape being worth more than a house for the indefinite future
Isn’t that what all the biggest bagholders thought?
How else do you explain anyone still holding a worthless NFT they spent thousands on?
That's how pyramid schemes work. Everyone "rationally" thinks they can find a downline, but most of them are wrong.
People in the bubble typically know they are in the bubble. They do not know when to get out. The "even if you didn't make a profit then you'd stand an even more reasonable chance of getting out with fairly minimal losses" is the thing people are wrong about - once bubble is popping, only fastest few can react fast enough.
It is called the Greater Fool theory. I know that it is a foolish purchase, it true value is less than what I paid for. But there is a greater fool out there that will pay more.