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Froth

Reviewed by Vishnu | Updated on Sep 30, 2020

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What is Market Froth?

Froth is referred to as the market conditions that exist prior to a market bubble. A bubble can be defined as an event in the market where the price of a particular asset overinflates following which the asset price declines.

In the event of froth, the value of an underlying asset surges rapidly due to the exorbitant demand for the asset in the market. This results in the asset prices dissociating from its intrinsic value and rise to an unsustainable level in the market.

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