At the beginning of March 2021, a trading card featuring Tom Brady was sold for $1.3 million. Bitcoin hit a total value of $1trillion. Digital artwork by Beeple was sold by Christie’s for a record $69.3 million after bids started at a low of only $100.
Interestingly, all these events are connected, and they are a part of the manias being experienced by the financial world. Real estate and stock prices have been pushed up by everyday and professional investors. Now, the trend is spilling over into some of the riskiest assets. These include collectibles, cryptocurrencies, and, most surprisingly, sneakers.
The Fall Of Bonds And Stocks
Specific conditions are feeding these frenzies. While the pandemic hit millions worldwide, there were still those who had overflowing bank accounts from government cash infusions and stimulus checks. However, while some people got more cash, bonds, and stocks, which are traditional investments, stopped looking as attractive as they did before.
As a result, boredom during the pandemic led to more creativity and risk-taking. Hot debates concerning such high-risk-next-big investments – much like gambling on “unique” sites like https://www.online-betting.jp/ – to have a glimpse of some other unique deals of the same kind took place in online communities such as Dischord and Reddit. Tech tools such as Coinbase and Robinhood offered the much-needed platforms for trade and purchase of various items at the click of a button.
Unfortunately, these manias have sparked a fire at a time when a lot of people, businesses, and organizations are going through deep economic pain and have introduced massive risk to numerous investors. Some people have experienced significant loss on Robinhood, which has been accused of abetting unwanted gambling-like behavior.
Assets such as Bitcoin aren’t stable. Those like NFTs and sneakers are too new and too hyped that it isn’t clear what they’ll be worth in the future. Much of this investment frenzy began last year after the coronavirus’s spread and subsequent free fall of the global economy.
In response to this event, the United States passed stimulus packages, purchased government bonds, and slashed interest rates. These actions had a lot to do with increasing the amounts of money into the global financial system.
There was a total of $16.45 trillion deposits into the U.S accounts early in the first quarter of this year. Bonds have become much less attractive because they now have low-interest rates. On the other hand, stocks are more expensive as they’ve been rising for the last decade.
The hysteria has now gone overboard with NFTs entering the scene. In February, an NFT GIF of a flying cat sold for about $580,000. Digital artists such as Steve Aoki and Grimes have been able to harvest tons of dollars from their work.
Clearly, the public is now, more than ever, thinking much more creatively about newer ways of investing. And the most exciting thing is, it doesn’t matter whether they’re doing it as a matter of interest, hobbies, for-profit, or nostalgia; they’re willing to go as far as it takes.
According to electronic musician 3lau, people are motivated by the fact that they can store value in a medium that provides emotional value. 3lau made $11.7 million selling his previously released albums NFTs.
On the other hand, investors are now looking into SPACs (special purpose acquisition companies). These financial platforms trade on the public market. However, they are non-operational shell companies. The creators of SPACs assure their shareholders of finding private companies they can merge with thus, effectively making the companies public.
Younger generations are keen on making financially sound and culturally relevant investment decisions. No one knows when and how the investment mania will end. Interestingly, some predict that wide distribution of vaccine and post-pandemic return to life as we knew it would result in prosperity seemingly likened to the Roaring Twenties.