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Bitcoin, Tesla and GameStop Bubbles as a Flight to Focal Points

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  • Jan Libich
  • Liam Lenten

Abstract

This article discusses the current bull runs in many assets such as Bitcoin, Big Tech and the meme stocks, concluding that they are very likely bubbles (well above their fundamental value). We then highlight a unique set of circumstances due to which the duration, magnitude, and subsequent correction of this market exuberance may be very different from previous bubble episodes. These circumstances have led to an ever-growing amount of global liquidity chasing a small number of widely-known assets that have played the role of Schelling’s ‘focal points’. In combination with extremely low (even negative) returns on conventional safe assets, the usual ‘flight to safety’ has been (partly) superseded by a ‘flight to focal points’.

Suggested Citation

  • Jan Libich & Liam Lenten, 2021. "Bitcoin, Tesla and GameStop Bubbles as a Flight to Focal Points," World Economics, World Economics, 1 Ivory Square, Plantation Wharf, London, United Kingdom, SW11 3UE, vol. 22(1), pages 83-108, January.
    • Handle: RePEc:wej:wldecn:823
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    File URL: https://www.worldeconomics.com/Journal/Papers/Article.details?ID=823
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    Cited by:

    1. Francesca Biagini & Lukas Gonon & Andrea Mazzon & Thilo Meyer-Brandis, 2022. "Detecting asset price bubbles using deep learning," Papers 2210.01726, arXiv.org, revised Jun 2024.
    2. Jan Libich & Liam Lenten, 2022. "Hero or villain? The financial system in the 21st century," Journal of Economic Surveys, Wiley Blackwell, vol. 36(1), pages 3-40, February.
    3. Nobanee, Haitham & Ellili, Nejla Ould Daoud, 2023. "What do we know about meme stocks? A bibliometric and systematic review, current streams, developments, and directions for future research," International Review of Economics & Finance, Elsevier, vol. 85(C), pages 589-602.
    4. Zi Yang, 2022. "GameStop or Game Just Started? Leveling the Playing Field for Social Media Meme Investors to Rebuild the Public’s Trust," JRFM, MDPI, vol. 16(1), pages 1-13, December.

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