The Druid Deep Dive, Episode 12: Tulip mania: the bubble that mostly wasn't (1637)
Tulip mania is finance's founding legend, and the archives say most of it never happened. Episode 12 traces the real 1637 trade, the 37 people who were actually exposed, and how the same story-writing machine now works on NFTs and memecoins.
The Druid Deep Dive, episode 12. Ancient wisdom for modern DeFi. Historical period: Dutch Republic, 1634 to 1638.
Episode 11 closed on Julian Hoppit's finding that the South Sea bubble had itself been bubbled, the legend of universal ruin laid over a narrower event. This episode takes the same method to the most bubbled bubble of all. Tulip mania opens nearly every popular history of speculation and is the one episode everyone can summarize: weavers selling their looms, a bulb worth a canal house, the Dutch economy in ruins by the spring of 1637. The archives support almost none of it. What they do show is more useful than the legend, because it explains how a small, contained episode became the template for three centuries of panic about crowds, and how the same process is running now in the market for tokens whose only function is to be owned.
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A luxury good in the richest country in the world
The setting is the Dutch Republic in the 1630s, at the peak of its commercial power, with the East India Company returning extraordinary profits, wealthy refugees arriving from the Spanish-controlled south, and a merchant class spending surplus income on gardens, paintings and rarities [1]. The tulip had reached Dutch gardens from the Ottoman world through the botanist Carolus Clusius in the late sixteenth century, and by the early 1630s it was an established luxury with more than 500 named varieties [2, 1]. The bulbs that commanded the highest prices were the "broken" ones, whose petals carried flames of contrasting colour, an effect growers could neither produce nor predict because, unknown until the twentieth century, it was caused by a virus [3].
Rarity did the rest. The entire supply of Semper Augustus, the most prized variety, sat in a single owner's hands in the 1620s, and its reported price rose from 1,000 guilders a bulb in 1623 to 3,000 in 1625 [1]. Peter Garber's reconstruction of bulb prices found that high and rapidly depreciating prices for new rare varieties are the normal pattern of the bulb trade in any century [4, 5]. Two groups competed for the prize bulbs, wealthy connoisseurs who wanted them for their gardens and professional growers who wanted breeding stock [1]. For most of the 1630s this was a collector's market, and it behaved like one.
Taverns, not the Bourse
The legend places the trade on the Amsterdam exchange. It did not happen there. Bulbs could only be lifted in summer, so for most of the year the market was a market in promises: a buyer contracted in winter for a bulb still in the ground, for delivery and payment in May or June [2, 6]. The New York Fed's account traces how these promissory notes, a credit mechanism for growers at first, were resold to people with no interest in planting anything and became a futures market [2].
That market ran through taverns and through the collegia, informal trading clubs with their own rules, committees of experts and rituals [6, 7]. Under the in het ootje method a seller paid a commission whether or not he accepted the bid, typically a round of drinks, which put a premium on accepting [2]. Anne Goldgar's archival work found a trade that was for most of the period calm, organized and conducted among people who knew each other, linked by family, by neighbourhood and, disproportionately, by Mennonite congregation [6, 1]. There was no clearing, no settlement guarantee and, as 1637 would show, no enforceability.
Five weeks in early 1637
Prices began moving in the autumn of 1636. Small offsets rose between four and ten times in the last three months of the year, and large bulbs roughly fivefold [1]. The acceleration came in January 1637, and it came in the common varieties rather than the rare ones. Garber's price series shows Witte Croonen, an ordinary bulb sold by weight, rising roughly twenty-six-fold during January 1637 and then falling to about a twentieth of its peak within a week in early February [4]. He concluded that only this final month, when bulbs anyone could grow changed hands at prices implying nothing about fundamentals, looks like a bubble at all [4].
An estate auction on February 5, 1637 raised 90,000 guilders for a deceased grower's collection, at a time when the wealthiest merchants in the Republic might hold half a million [2, 3]. In the same week, at an auction in Haarlem, an offer of bulbs drew no bids, was reduced, drew no bids again, and the market stopped [2]. Where bulbs could be sold afterwards, it was for one to five percent of the prices agreed weeks earlier [2].
Then comes the part that is almost always left out. Late in February, delegates of the trade met in Amsterdam and proposed that buyers be allowed to cancel contracts for a fraction of the agreed price; the Court of Holland declined to take the cases and sent disputes back to local authorities and private negotiation; and Haarlem's council eventually allowed buyers to walk away on payment of a small settlement [2, 8, 6]. Most disputes were resolved with payments of between 3.5 and 10 percent of the contract price [1]. Earl Thompson's reading is that the prices recorded in January and February were never spot prices. Once traders expected contracts to become cancellable for a small fee, a future had become an option, and what the pamphlets recorded as the price of a bulb was the strike of an option that cost almost nothing to abandon [8]. On that reading the famous numbers are an artifact of a change in legal expectations, not evidence of mass delusion.
Who was actually exposed
Here the ledger and the legend part company completely. Goldgar, working through the notarial and court archives of the trade's main towns, identified only 37 people who spent more than 300 guilders on bulbs, roughly a master craftsman's annual wage, and the most expensive documented sale she found was 5,000 guilders [6]. With one or two exceptions those buyers were wealthy merchants who could carry the loss. She never found a chain of buyers longer than five, against a legend of bulbs changing hands ten times a day [6]. Because no money moved until delivery, those who "lost" in February lost notionally: they might not get paid. Anyone who had both bought and sold on paper since the summer lost nothing [6].
Goldgar found not a single bankruptcy in these years attributable to tulips, and the wider Dutch economy showed no measurable effect [6, 1]. Even Mike Dash, the narrative historian most sympathetic to the traditional account, records no trials, verdicts or convictions [1, 3]. William Quinn and John Turner left it out of their 2020 history of bubbles altogether, as a thinly traded commodity with no promotion boom and negligible economic impact, "too unremarkable to merit inclusion" [9].
The disagreement should be shown rather than hidden. The New York Fed's account, following Dash, describes novice florists in January 1637 mortgaging goods and tools to enter the trade [2]. Goldgar's archival search found no heavy borrowing and no weaver who sold his loom [6, 1]. Garber, for his part, accepts that the January spike in common bulbs resists a fundamentals explanation [4]. The honest synthesis is a real and sharp price spike in a narrow market over roughly five weeks, financed mostly by promises rather than credit, with losers who were few, wealthy and able to negotiate their way out.
How the legend got written
If the damage was so limited, the durability of the story needs explaining, and the explanation is that the story was a product from the start. Within weeks of the crash the Dutch tradition of satirical pamphlets produced the dialogue between Waermondt and Gaergoedt, True-mouth and Greedy-goods, in which the trade and its participants were mocked for the reader's moral instruction [10, 1]. Those pamphlets were picked up by later seventeenth-century writers, then by Johann Beckmann's eighteenth-century German history of inventions, and then plundered by Charles Mackay for Extraordinary Popular Delusions and the Madness of Crowds in 1841 [6, 11]. Mackay's chapter, with its weavers and looms, its sailor who ate a Semper Augustus thinking it an onion, and its nation ruined, passed into Galbraith, into Malkiel and into every investment primer since [6, 1, 11].
The sequence deserves naming, because it reappears below: a narrow speculative event, a satire written immediately afterward for an audience that wanted a lesson, and a popularizer two centuries later who mistook the satire for the record.
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The modern parallel: collectibles, taverns and the pamphlet
The Druid will not call bitcoin tulip mania; Goldgar made that comparison's weakness clear years ago [6]. The structural match lies elsewhere, in two markets for assets whose only function is to be owned: NFTs in the 2021 to 2022 cycle, and memecoins since.
Start with the instrument. In February 2025 the staff of the SEC's Division of Corporation Finance published its view that memecoins, bought for entertainment and social purposes and with limited or no use, are "akin to collectibles" and are not securities, so that neither purchasers nor holders are protected by the federal securities laws, though fraud remains actionable under other statutes [12]. It carries no legal force, and a dissenting commissioner called it unsupported [12, 13]. Read it alongside the Court of Holland in 1637, which treated bulb contracts as outside its competence and told the parties to settle among themselves [6, 2]. In both cases the authority declined to stand behind the contract, leaving the venue and the counterparty as the only recourse.
Then the venue. Memecoin issuance runs through launchpads whose bonding curves raise the price with every purchase before a token graduates to an open pool, and through the chat groups where attention is manufactured [14, 15]. The data on those venues reads like Goldgar's archive at industrial scale. Chainalysis counted 2,063,519 tokens launched in 2024, of which 42.5 percent were ever listed on a decentralized exchange, 1.7 percent were still trading a month later, and 74,037, or 3.59 percent, displayed the liquidity-removal pattern of a pump and dump, with 94 percent of those pools drained by the address that created them and a median lifespan of zero days [16]. On Pump.fun alone, Solidus Labs found that of more than seven million tokens deployed between January 2024 and March 2025, about 97,000 retained even $1,000 of liquidity [14, 15].
Now the exposure, which is the point of this episode. The NFT cycle produced headlines about million-dollar sales and a legend of mass retail ruin. The peer-reviewed data is narrower. Analysing 6.1 million trades of 4.7 million NFTs through April 2021, Nadini and colleagues found that three quarters of NFTs sold for an average under $15, that the top one percent sold above roughly $1,600, that the top ten percent of traders performed 85 percent of all transactions, and that traders did at least 73 percent of their trades within a single collection [17]. Chainalysis identified 262 habitual wash traders in the same market, of whom the 110 profitable ones extracted about $8.9 million, real money and a rounding error against the $44.2 billion sent to NFT contracts in 2021 [18]. Small clusters of connected participants, most assets cheap, the large numbers concentrated in very few hands: the 1637 structure, with the guilders converted.
And then the pamphlet. In September 2023 a crypto gambling affiliate site published a report concluding that 95 percent of NFTs were worthless, on the basis that 69,795 of 73,257 collections in a third-party dataset showed a market capitalization of zero ether, and extrapolated from that count to an estimate of 23 million people holding worthless investments [19, 20]. The report did not say which collections it counted, and it reached a headline about people by counting collections rather than capital [20]. Business Insider and much of the financial press repeated it within days, and "95 percent of NFTs are worthless" is now the settled public verdict on the cycle [19]. Whatever the true figure, that is a Waermondt and Gaergoedt pamphlet in the form of a content-marketing study, and it will enter the textbooks for the same reason: it supplies the lesson the audience wanted.
The reader can judge the fit. The Druid only notes that both halves of the legend, the one that says everyone was ruined and the one that says it was all nothing, are products, written after the fact, by parties selling something.
Portfolio lessons
First, size a bubble by who was exposed, not by peak prices. A 5,000-guilder bulb and a token at a nine-figure market capitalization are striking numbers and nearly irrelevant to the question of damage. The right questions are how much capital was committed, by whom, with what borrowing, and how far the exposure reached into balance sheets that mattered. By those tests tulip mania was small, and so, for all the noise, was most of the NFT cycle [6, 9, 17]. Measure one's own exposure the same way, by capital committed, not by the value a screen displays at the top.
Second, separate capital destruction from moral panic. The Dutch economy was untouched by 1637 because the trade was not connected to the banks, the credit system or the real economy [2]. That is what separates a contained episode from episode 10's Mississippi system, where the bank, the asset and the price were one entity, and from episode 11, where the state was a counterparty. The question to ask of any speculative market is not whether it is absurd but whether it is plugged into credit. Memecoins bought with stablecoins on a launchpad are tavern business. Memecoins posted as collateral on a lending market are something else, and that difference is the whole of the risk.
Third, contracts without a backstop settle at whatever the counterparty will pay. Bulb contracts settled at 3.5 to 10 percent because no court would enforce them [1]. The SEC staff statement is, in its own register, the same notice [12]. This is the four-layer liquidity framework from episode 9 applied to an asset class where layers two through four do not exist: for a collectible with no clearing, no backstop and no hub, the exit price is the depth of one pool at the moment one needs it, and position sizing should assume that depth is zero.
Fourth, what made tulips harmless was the absence of leverage. Goldgar found no heavy borrowing, and the losses were notional because nothing had been paid [6]. A portfolio can reproduce that property by design: any allocation to speculative collectibles, if held at all, sized to go to zero without forcing the sale of anything else, funded with no borrowed money, and walled off from the core of diversified, yield-bearing assets. Survival over optimization, with the speculative sleeve treated as a bulb in the ground: it may flower, and nothing depends on it.
Fifth, read the pamphlet as a pamphlet. Mackay was entertaining, widely believed and wrong in most particulars, and his correction took a century and a half [4, 6]. The studies that will define the memecoin era are being written now, by gambling affiliates, surveillance vendors and regulators, each with something to sell. The Druid's method has not changed: find the ledger, count the exposed, and distrust any story that arrives with its moral already attached.
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Publication information: Last updated: August 22, 2026 | Series: The Druid Deep Dive | Publisher: The Genesis Address LLC
Sources and references
[1] Denby, Jonathan. "Tulipmania: A Garden Historian's Perspective." Faculty of History, University of Oxford. https://www.history.ox.ac.uk/tulipmania-garden-historians-perspective.
[2] Narron, James, and David Skeie. "Crisis Chronicles: Tulip Mania, 1633-37." Federal Reserve Bank of New York, Liberty Street Economics. September 6, 2013. https://libertystreeteconomics.newyorkfed.org/2013/09/crisis-chronicles-tulip-mania-1633-37/.
[3] Dash, Mike. Tulipomania: The Story of the World's Most Coveted Flower and the Extraordinary Passions It Aroused. Crown, 1999.
[4] Garber, Peter M. "Tulipmania." Journal of Political Economy 97, no. 3 (1989): 535-560. https://www.journals.uchicago.edu/doi/abs/10.1086/261615.
[5] Garber, Peter M. "Famous First Bubbles." Journal of Economic Perspectives 4, no. 2 (1990): 35-54. https://www.aeaweb.org/articles?id=10.1257/jep.4.2.35.
[6] Goldgar, Anne. "Tulip mania: the classic story of a Dutch financial bubble is mostly wrong." The Conversation. February 12, 2018. https://theconversation.com/tulip-mania-the-classic-story-of-a-dutch-financial-bubble-is-mostly-wrong-91413.
[7] Goldgar, Anne. Tulipmania: Money, Honor, and Knowledge in the Dutch Golden Age. University of Chicago Press, 2007. https://press.uchicago.edu/ucp/books/book/chicago/T/bo5414939.html.
[8] Thompson, Earl A. "The tulipmania: Fact or artifact?" Public Choice 130, no. 1 (2007): 99-114. https://link.springer.com/article/10.1007/s11127-006-9074-4.
[9] Quinn, William, and John D. Turner. Boom and Bust: A Global History of Financial Bubbles. Cambridge University Press, 2020. Chapter 1, "The Bubble Triangle." https://www.cambridge.org/core/books/boom-and-bust/D09C2E3BEA798F6EDC9D3880FC0300ED.
[10] Posthumus, N. W. "The Tulip Mania in Holland in the Years 1636 and 1637." Journal of Economic and Business History 1 (1929): 434-455. Includes translations of the 1637 Waermondt and Gaergoedt pamphlets.
[11] Mackay, Charles. Memoirs of Extraordinary Popular Delusions and the Madness of Crowds. London, 1841 (1852 edition). Project Gutenberg. https://www.gutenberg.org/ebooks/24518.
[12] U.S. Securities and Exchange Commission, Division of Corporation Finance. "Staff Statement on Meme Coins." February 27, 2025. https://www.sec.gov/newsroom/speeches-statements/staff-statement-meme-coins.
[13] Crenshaw, Caroline A. "Response to Staff Statement on Meme Coins: What Does it Meme?" U.S. Securities and Exchange Commission. February 27, 2025. https://www.sec.gov/newsroom/speeches-statements/crenshaw-response-staff-statement-meme-coins-022725.
[14] Solidus Labs. "Solana Rug Pulls & Pump-and-Dumps: What Crypto Institutions Must Know." May 2025. https://www.soliduslabs.com/reports/solana-rug-pulls-pump-dumps-crypto-compliance.
[15] CoinDesk. "98% of Tokens on Pump.Fun Have Been Rug Pulls or an Act of Fraud, Report Says." May 7, 2025. https://www.coindesk.com/business/2025/05/07/98-of-tokens-on-pump-fun-have-been-rug-pulls-or-an-act-of-fraud-new-report-says.
[16] Chainalysis. "Market Manipulation: Suspected Wash Trading on Select Blockchains May Account for Up To $2.57 Billion in Trading Volume." 2025 Crypto Crime Report. January 29, 2025, updated February 14, 2025. https://www.chainalysis.com/blog/crypto-market-manipulation-wash-trading-pump-and-dump-2025/.
[17] Nadini, Matthieu, Laura Alessandretti, Flavio Di Giacinto, Mauro Martino, Luca Maria Aiello, and Andrea Baronchelli. "Mapping the NFT revolution: market trends, trade networks, and visual features." Scientific Reports 11, 20902 (2021). https://www.nature.com/articles/s41598-021-00053-8.
[18] Chainalysis. "Crime and NFTs: Chainalysis Detects Significant Wash Trading and Some NFT Money Laundering in This Emerging Asset Class." February 2, 2022. https://www.chainalysis.com/blog/2022-crypto-crime-report-preview-nft-wash-trading-money-laundering/.
[19] Rosen, Phil. "Remember when NFTs sold for millions of dollars? 95% of the digital collectibles may now be worthless." Business Insider, September 21, 2023. Syndicated at https://www.aol.com/remember-nfts-sold-millions-dollars-135646632.html.
[20] Crypto.news. "Nearly 95% of NFTs are now worthless, report says." September 21, 2023. Syndicated by Investing.com. https://investing.com/news/cryptocurrency-news/nearly-95-of-nfts-are-now-worthless-report-says-3179451.
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