Will the AI bubble pop by X date?
For the purpose of resolving this market, I will define the AI bubble popping as a reduction in the Roundhill Magnificent Seven ETF (MAGS) closing price of 35% or more within a period of 10 consecutive trading days.
More formally, let pₜ be the closing price of MAGS on trading day t, and let pₜ₊ₛ be the closing price of MAGS on trading day t + s, such that 0 < s ≤ 10. A market will resolve to Yes if
(pₜ - pₜ₊ₛ) / pₜ ≥ .35is satisfied by the stated date. If it is not satisfied by the stated date, it will resolve to No.
Notes
There are similar markets based on subjective resolution criteria (here and here) . Although there is not a single, perfect definition of an AI bubble popping, this is my attempt to introduce more objectivity into the market resolution criteria.
The criteria above could be triggered by multiple events, such as a second so-called Liberation Day, and may not have a unique cause. Given the difficulty of establishing causation, I will not consider factors beyond the criteria above.
Update 2025-10-26 (PST) (AI summary of creator comment): The creator has updated the threshold from the originally proposed values to 35% reduction within 10 consecutive trading days. The market will resolve to Yes if the MAGS ETF closing price drops by 35% or more within any 10 consecutive trading day period by the stated date.
1,000@xjp, I accept your criticism. There are different criteria that one could use. I could have used 50% reduction in 5 days, or something else. But if you think that is "nothing", just noise in the market, shouldn't you buy Yes on the markets?
@dfish I still don't agree that that reflects a bubble pop at all. In 2000 for reference the NASDAQ went down 50% and didn't fully recover for about 15 years. An AI bubble pop wouldn't have to be as extreme, but it's really about a large drop over months that stays low over years. The criteria being over 10-20 days isn't looking at the right scope in my opinion.
It could easily go down 50% but a little too slowly and so the 10 or 20 day criteria wouldn't be met.
I would ditch the short term time requirement and add a longer term requirement that it doesn't recover quickly. Something like down 40% from any peak, not recovering more than half that difference within 1 year.
Also, I don't agree with modifying the criteria of a market that people have already bet on. I would N/A and create a new one by default unless you want to ask @ traders if anyone objects to changing it first. On the other hand, in this case I don't have mana invested so I don't really mind.
@xjp I agree that it isn't 1:1 with there being a bubble but it's strongly connected.
Also, yes, N/A and re-create is probably the best option here.
My goal in creating this market was to establish objective resolution criteria for something that approximates the nebulous concept of a bubble popping. The prices in several markets addressing this question were impossible interpret because the resolution criteria were subjective. Even though there is room for disagreement, I think the objective criteria I proposed is an improvement, and its even better after incorporating community feedback.
The metaphor of a bubble popping is intended to convey a quick and large decrease in price. My goal was to capture this with a large decrease (e.g., 35% or more) within a short period of time (e.g., 10 days). Including recovery time would be reasonable depending on a person's goals, but I am not interested in the entire life cycle of a bubble.
As I noted in my description, a perfect definition does not exist and I doubt we could achieve a consensus. However, I did incorporate community feedback to make the criteria more in line with expectations. Ultimately, people must read the criteria and decide how and whether to trade.
I decided not resolve the market to N/A because there was only one holder at the time, and adopting stricter criteria did not disadvantage the holder. Resolving the market to N/A at this point would probably be disruptive to the other 11 holders (excluding myself and the other holder). However, I would be willing to resolve to N/A if the other holders agree that is the best course of action based on a poll or other group decision making process of their choosing.