Bitcoin increased 6.9 billion percent between 2010 and 2021.

Over $160 billion in crypto gains was realized in 2021 alone—$76.3B in ETH, $74.7B in BTC, $11.7B in altcoins. Millionaires and billionaires were minted. All that money needed to go somewhere.

What do newly wealthy people buy? Often, things that are valuable because they're expensive.

Key Takeaways

• Veblen goods get more valuable as price rises. Luxury items, NFTs, and status symbols follow this pattern.
• Crypto created a generation of new money playing with house money. This changes what they buy and why.
• "Follow the cult" is actual trading advice in NFT markets. Assets are worth what someone else will pay—nothing more.

Types of Goods

Normal goods: You buy more as income rises. New iPhone when yours works fine. Expensive latte machine. Vacations.

Inferior goods: You buy less as income rises. Knockoff brands. Low-quality food substitutes.

Veblen goods: The rules invert. Value increases because price increases.

The Veblen Effect

Consider two white cotton t-shirts:

• TJMaxx: $5
• Prada: $500

The material difference is negligible. The price difference is the point. The Prada insignia carries clout and cultural significance. You're not buying cotton—you're buying status.

NFTs work the same way. People buy them for:

1. Flipping (buy at X, sell at X+Y)
2. Community membership
3. Status signaling

Usually all three.

Valuing the Unvaluable

How do you value an NFT? Ask successful crypto traders and they'll say: follow the cult.

Not join the cult. Observe which communities are most cultish. Position accordingly.

The pattern:

1. Price rises
2. People notice
3. More people buy
4. Price rises more
5. Average buyer gets priced out
6. Capitulation
7. 99% go to zero

Why do people flock to gold in crises when rarer metals exist? Because other people flock to gold. The mimetic desire is the feature, not a bug.

Ethereum as Veblen Good

Ethereum's argument is decentralization and security. Most users don't care—they care about fees and UX.

When you pay $100 for an Ethereum transaction you can do on Solana for $0.001, what are you paying for? Network effects. Status. The right to say you're "on Ethereum."

This is somewhat tongue-in-cheek. But as more scalable chains rise, Ethereum's fees may become increasingly Veblen—a premium people pay because it's expensive, not despite it.

The Psychology of FOMO

When economies bust, discretionary spending drops. When economies boom, normal goods become Veblen goods.

The decision logic:

• BTC up 5%: "I can buy later at a similar price. No rush."
• BTC up 20%: "I'll never see this price again. Buy now."

Both decisions are driven by the same psychology—just in different directions. FOMO on the way up. Panic on the way down.

Fundamentals rarely drive entry and exit decisions in volatile markets. Psychology does. And in a market where assets are worth whatever someone else will pay, psychology is the fundamental.