SPACs vs Crypto: Two Bubbles, Same Playbook

In the annals of speculative manias, 2020-2021 will be remembered as the era when two distinct bubbles inflated simultaneously, fueled by the same forces, endorsed by the same celebrities, and devastated the same retail investors. The SPAC boom and the crypto boom were twin phenomena — different assets, identical playbooks, and a combined ~$2.25 trillion in losses.

This is not a coincidence. Both bubbles were products of the same macroeconomic environment: near-zero interest rates, $5 trillion in pandemic stimulus payments, a bored population stuck at home with smartphones and brokerage accounts, and a regulatory apparatus that was years behind the innovation curve. Understanding the parallels reveals something important: the next bubble won't look like crypto or SPACs, but it will use the exact same playbook.

Timeline: Twin Peaks

The timing is almost eerie. Both assets peaked in late 2021, both entered free-fall in 2022, and both left a trail of bankruptcies, fraud investigations, and retail investor devastation by 2023.

The Celebrity Endorsement Machine

Nothing signals a market top quite like celebrities telling you to buy things they don't understand. Both the SPAC and crypto booms were turbocharged by famous faces lending credibility to speculative assets:

Shaquille O'Neal and Steph Curry managed to lose money in both bubbles simultaneously — SPACs and FTX. The celebrity endorsement pipeline was a factory for retail investor extraction.

Same Fuel: Stimulus Money and Zero Rates

The U.S. government distributed approximately $5 trillion in pandemic relief between March 2020 and March 2021. The Federal Reserve held interest rates at effectively zero and purchased $120 billion per month in bonds, flooding the financial system with liquidity. Savings rates spiked to 33% in April 2020 — the highest ever recorded.

This wall of money needed somewhere to go. With savings accounts paying 0.01% and bonds offering negligible yields, risk assets became the only game in town. Robinhood added 10 million new accounts in 2020. Coinbase added 34 million verified users the same year. A generation of first-time investors learned about "investing" in an environment where everything went up, and the lesson they absorbed was that risk didn't exist.

SPACs and crypto were the perfect vessels for this liquidity: both were accessible on mobile apps, both had low barriers to entry, both offered the promise of exponential returns, and both had narratives compelling enough to spread virally on social media.

Same Playbook: FOMO, Narratives, and Regulatory Gaps

1. The Narrative Over Numbers Game

Both bubbles thrived on stories, not spreadsheets. SPAC pitch decks projected billions in revenue from companies with zero products. Crypto whitepapers described decentralized utopias with no viable economic model. In both cases, the narrative was the product. Questioning the narrative made you "not getting it" or "having fun staying poor."

2. The Regulatory Arbitrage

SPACs exploited the safe harbor provision that allowed forward-looking projections — something prohibited in traditional IPOs. This let companies project revenue they would never achieve without legal consequences. Crypto exploited the ambiguity about whether tokens were securities, allowing projects to raise billions without registering with the SEC or providing audited financials.

In both cases, the regulatory gap wasn't an accident — it was the feature that made the bubble possible. If SPACs had been subject to IPO rules, the projections would have been illegal. If crypto tokens had been regulated as securities, most projects couldn't have launched.

3. The Ponzi Dynamics

Both bubbles exhibited Ponzi-like characteristics where early investors were paid with money from later investors. SPAC sponsors sold promote shares to new investors at inflated prices. Crypto projects used "yield farming" and "staking rewards" that were funded by new capital inflows, not by actual economic activity. When new money stopped flowing, both structures collapsed.

The Damage: By the Numbers

The Key Difference: Who Collected the Guaranteed Fees

There is one critical difference between the two bubbles, and it makes SPACs arguably worse:

In crypto, losses were distributed chaotically. Founders, exchanges, and early investors took money from later investors, but there was no systematic fee extraction by a trusted intermediary class. When FTX collapsed, the fraud was the work of one exchange, not the entire banking system.

In SPACs, Wall Street banks collected $8+ billion in underwriting fees — guaranteed, regardless of investor outcomes. The sponsor promote extracted 20% of every deal, guaranteed. The extraction was systematic, disclosed, legal, and designed into the product from day one. The SPAC structure was specifically engineered to transfer wealth from retail investors to insiders. Crypto at least had the honesty to be chaotic; SPACs dressed up their extraction in a three-piece suit and a prospectus.

Will It Happen Again?

Of course it will. The specific vehicles will be different — perhaps AI tokens, or space mining SPACs, or whatever narrative captures the imagination of a new generation of investors. But the playbook is eternal: easy money, viral narratives, celebrity endorsements, regulatory gaps, and the unshakeable human belief that this time is different.

The SPAC boom and the crypto boom were not separate events. They were the same event, wearing different costumes. And the next time interest rates go to zero and the government mails everyone a check, the costumes will change again, but the show will be exactly the same.

SPAC data from SPACGraveyard database and SEC filings. Crypto market data from CoinGecko and CoinMarketCap. Loss estimates are approximate and based on publicly available analyses.