Report: Why Do Bubbles Burst In Emerging Sectors Like Crypto, Cannabis & Psychedelics

Here’s the report in full from Key Partners

Introduction

New technological innovations and consumer product categories often demonstrate massive growth potential. These technologies (e.g., cryptocurrencies, virtual reality, artificial intelligence) and product categories (e.g., cannabis, psychedelic therapies, alternative proteins) in turn attract massive investor demand. However, there is almost always a disconnect between consumer acceptance of these technologies/ products and the capital markets performance of companies in these sectors. What drives this dislocation? Why do investors overvalue emerging sectors at the beginning of cycles and undervalue them later-on? In this white paper, we discuss the boom-and-bust cycles of emerging sectors. We highlight the cryptocurrency, cannabis and psychedelics industries as relevant case studies.