A market bubble is typically characterized by a rapid increase in asset prices, driven by exuberant speculation rather than intrinsic value. Key signs include a significant deviation between asset prices and fundamental values, widespread media coverage, and investor enthusiasm often exceeding normal levels. In such periods, participants may exhibit irrational behavior, buying assets solely based on price momentum. Additionally, the presence of high leverage and an influx of retail investors can further inflate the bubble. Once sentiment shifts, bubbles tend to burst, leading to sharp declines in prices. Consequently, recognizing these indicators early can help traders make informed decisions.
Market Education