Tulip Mania

Tulips reached the Dutch Republic from the Ottoman Empire in the late 1500s and became a status object for wealthy merchants. The rarest bulbs, the ones with flamed and striped petals (caused, it turned out centuries later, by a virus), were sold by weight and could not be reproduced on demand. By 1636 the trade had moved from bulbs in the ground to paper contracts on bulbs still in the ground, traded in taverns, resold many times over a winter, in what the Dutch themselves called the wind trade. Prices for a single prized bulb were quoted at the cost of a canal house. Then, at an auction in Haarlem in the first days of February 1637, the buyers did not show up, and within a week the contracts were worth a fraction of their face.

That is the event. The legend is bigger. Most of what people know about tulip mania comes from Charles Mackay's 1841 book Extraordinary Popular Delusions and the Madness of Crowds, which describes a whole nation ruined, sailors eating priceless bulbs by mistake, and fortunes lost by chimney sweeps. Mackay was working from pamphlets written at the time to mock the traders. When the historian Anne Goldgar went through the Haarlem and Amsterdam archives for her 2007 study, she found a small circle of traders, most of them already rich, no bankruptcies she could trace to tulips, and disputes the courts refused to hear, which left buyers free to walk away. Nobody starved. The Dutch economy did not notice.

The comparison to Bitcoin is nearly as old as the price chart, and it gets repeated at the top of every cycle. Jamie Dimon gave the best-known version at two conferences on 12 September 2017: Bitcoin was "a fraud," "worse than tulip bulbs," and would not end well. JPMorgan later opened bitcoin funds to its wealth clients, and in 2025 Dimon said the bank would let any client buy it.

The comparison describes something real. Bitcoin's four blow-off tops look like every bubble in the history books, including the 1637 one: a price that goes vertical, a crowd that arrives late, and a crash that gives most of it back. From the 2011 peak it fell about 93 percent. From December 2013 to January 2015, about 86 percent. From December 2017 to December 2018, about 84 percent. From November 2021 to November 2022, about 77 percent. Anyone who bought the top of any of those four got what a tulip buyer got in February 1637, at least for a while.

Where the comparison breaks is what happened next. A tulip bulb in 1638 was worth a tulip bulb, and it still is. Bitcoin made a new all-time high after each of those four collapses, with more users, more hash rate, and more nodes behind it than at the previous peak. A bubble is a price event; it says nothing about whether the thing underneath was worth anything. The tulip trade had no thing underneath except the bulbs. Whether Bitcoin does is the intrinsic value question, and the four recoveries are the strongest evidence either side has.

The honest way to use the phrase: Bitcoin has had tulip manias inside it. It has not been one. And if you find yourself paying a canal house for something in the last month of a vertical chart, the Haarlem auction is still the right thing to think about.