South Sea Bubble 1720: Leverage Lessons for XRP Holders

In April 1720, a London bookseller called Thomas Guy started selling his shares in the South Sea Company. Now, he didn't sell them all at once. He sold a slice at a time as the price kept climbing. By June, he'd actually sold the last of them. And a few months later, the price had fallen almost all the way back to where it began.

So, a bookseller walked out of the 1720 bubble rich. And here's what he did. He sold into the excitement while plenty of other people were borrowing money to buy more. He wasn't the only one, guys, that got out right? The people close to the company did, too.

Now, in 1720, the well-connected, they cashed out on the way up. And the late buyers got burned. So, this relates to now. If you own XRP, the South Sea bubble shows who gets hurt when borrowed money piles in. It's actually one of the oldest money stories that there is.

And I think it tells us more about holding crypto than most of the charts that we look at. Now, I have put a link in the first description for a reason, okay? I'm going to explain it before we reach 5 minutes of the video. It's for anyone who has ever bought into something because everyone around them seemed to be getting rich from it. And to be completely honest, most of us have been there.

The neighbor doing well, the group chat is buzzing, and we feel like the only people not in on it. So, we jump [snorts] in late and often with more than we meant to. And sometimes with money we borrowed. That's exactly how it went in the 1720s. Here's how the company came about.

The South Sea Company was set up in 1711. Now, Britain had actually run up huge debts fighting wars, as you know. And the company's job was to take some of that debt off the government's hands. Now, people who were owed money by the state could actually swap what they held for shares in the company. In return, it was given the right to trade with Spain's colonies in South America.

Now, after the Treaty of Utrecht in 1713, that included the contract to ship enslaved Africans to those colonies. It's probably the grimmest part of this story. And historians like Dr. Helen Paul, in her lecture at Gresham College, point out that it usually gets left out. But then, in 1720, the company won a far bigger deal to take over most of the national debt.

Now, according to the Financial Times podcast The Story of Money, that was around 30 million pounds. Here's how the podcast describes what the share price did next.

Exactly, because for the last 9 years, the company's share price has been kind of boring. It's been bobbing around at about 100 pounds to 130 pounds per share. But then, over the next 12 months, it starts behaving like a meme stock. It goes up to 1,000 pounds a share before then collapsing right back to where it started.

A meme stock in 1720 in the timeline is wild, right? According to the finance educator Patrick Boyle, the shares actually hit 500 pounds on the 28th of May. Now, they actually closed at 720 on the 1st of June. That's 50% in 4 days. So, what was pushing it up so fast?

Well, the honest answer is that the business underneath it hadn't changed much at all. And what had changed was the way people were buying. As always, guys, this is not financial advice. Please do your own research. If you are feeling bullish, please hit the like button.

And if you're a returning bull runner, please, please make sure you've hit that subscribe button.

[music]

Now, before we see how they did it, right? Let's stay with Thomas Guy for a second. He did not have a crystal ball, right? But what he seems to have had was a reason for owning these shares and a point where that reason no longer held. Well, most of us didn't have that written down anywhere.

We decide in the moment, and the moment is usually when everyone else is deciding, too. Now, throughout this video, I'm not telling you to buy XRP, okay? There may be way better opportunities for your situation, but whatever you hold, it helps us to decide how much is enough, where it's kept, and when you take some off the table before the crowd turns up. Now, that's the heart of Altcoin Pro, okay? And the course we built, cuz it's about having a plan that you can write in calmer waters so you're not making it up in a storm.

If you'd like that conversation, it's only three short steps. All you got to do, go to the first link in the description, fill in a short form, and then simply book your free 15-minute call. It's absolutely free, and one of the team will talk you through your own strategy and your own situation. All right, it's not going to cost you anything at all. If you're watching this on your phone, just tap the more button under the video, it's going to pop up that first link.

All you got to do is do this while things are calm, not in the middle of the next rush, cuz then it might be too late. All right, then just come back and see how they push the price up, because now I'm going to tell you the part of the story that gets super uncomfortable. All right, the company sold new shares to the public in rounds, which they actually called subscriptions. And the terms are the part that should make any of us sit up. Here's Patrick Boyle, and I want you to really pay attention to this clip.

The first share subscription in mid-April required investors to put down only 20% of the purchase price, and they could pay off the rest in installments over 16 months. To add fuel to the fire, the next subscription required only a 10% down payment, with the installments stretching out even longer. The third and fourth subscriptions came over the summer on similar terms. Allowing people to invest with borrowed money, and giving them more and more leverage, will have helped the price to soar.

Leverage just means buying with borrowed money. So, a small move in the price makes a big difference to what you've actually got. If you put down 10%, the price only has to fall by 10% for your stake to be gone. And the company went further than that. Here's Dr.

Helen Paul at Gresham College. Check this out.

The company directors of the South Sea Company tried various things to get people more interested in their shares, including issuing loans of cash to people who were shareholders. That's not something that I think you would do today. They were issuing bribes to important people. But that was part and parcel of the way business was done at the time, and not directly, obviously, connected to the bubble itself.

So, the company lent people money and that money could go straight back into its own shares. It's actually a loop, right? Rising prices make the shares look like better security for a loan and the loans buy more shares and the price rises again. Well, it works beautifully on the way up. As for those bribes, Patrick Boyle says that the company's cashier, Robert Knight, handed out free shares to the politicians and grandees who could actually help get the deal through.

Well, if the price went up, so did the value of their gift. They had every reason to want it to go higher. And when other schemes actually started popping up to grab some of that cash, the company backed a new law and it was passed in June 1720. That then became known as the Bubble Act. Both Patrick Boyle and the FT podcast described the company's support in it to shut down rival companies that were competing for investors' money.

So, you're probably thinking who got out in time? Well, Thomas Guy is the best known. Here's Patrick Boyle on what exactly he did. He'd held those shares for years as a steady earner.

By 1720, he had already received 10 years' worth of dividends. He started selling his shares that April at £300 a share, slowly exiting his massive position as the price went up. When he sold his last shares at £700 that June, he was done. He had amassed a fortune equivalent to around half a billion pounds in today's money and committed it all to building a hospital to help the people of London. Guy's Hospital is still around today and is one of the largest hospitals in the UK.

And when the price ran far beyond anything that made sense, he actually turned them into cash bit by bit. Now, Boyle says that Guy left no record of his thinking, so we're reading it from what he did, but what he did was calm and methodical and Guy's Hospital in London actually carries his name. Now, he wasn't alone, right? Boyle says Sarah Churchill, the Duchess of Marlborough, actually sold at £500. He actually says plenty of company insiders sold at high prices and bought land with the money.

So, there's the other side, too. Boyle tells the story of the Duke of Portland and one of the richest men in Britain who signed 24 separate contracts to buy shares at a future date. So, when the price fell, he owed far more than he could pay, and his family fortune was gone with just a few months. Same company, same year, one man sold into the rise, and the other bought against it. And then, there's a man who tried to warn everyone, named Archibald Hutcheson.

He was a member of the Parliament who, from March 1720, published his own sums on what the shares were actually worth. Now, as Patrick Boyle tells it, Hutcheson worked out the price of just 200 pounds would need the company to make about 3 and 1/2 million pounds a year from its trade. Its voyages had struggled to make 100,000 pounds in 3 years. Hardly anyone listened, right? And at the peak of summer, Boyle says the market was pricing the company above all the property in Great Britain.

Then, with no big announcement, it just started to slide. The company even went back to the public in August selling more shares at 1,000 pounds each. On the FT podcast, Professor Thomas Levenson says the subscription filled up. Now, by autumn, the price was below 150 pounds. People wanted answers, and the Parliament went looking.

Here's Dr. Helen Paul on what happened to the evidence.

In fact, he made sure that some of the company books left the country so that people like the King's mistress could not be exposed. Here we see Robert Knight, the cashier, leaving with the books. He's taking the Devil's Lucifer's rowbarge to the continent, where he was then captured. But, Walpole made some show of wanting him back, and behind the scenes asked his captors to let him go.

Dr. Paul also says the stories of mass ruin are mostly overblown. She actually says historians can't find much evidence of lasting damage to the wider economy. But, for the people who bought late with borrowed money, it was a disaster all the same. Now, you've probably heard that Isaac Newton lost a fortune in the bubble, right?

He said that he couldn't calculate the motions of the heavens, but not the madness of the people. Well, it gets shared everywhere, and here's what Dr. Paul makes of it.

So, we don't necessarily know exactly who owned what, allowing stories and myths to arise, like the idea that Isaac Newton lost a lot of money. His the famous quote about being able to calculate the movement of heavenly bodies, but not the madness of the people, is not likely to be true. Newton scholars think that he didn't really lose a lot of money, but that it's part of the myth of the bubble.

Not everyone agrees. Patrick Boyle says the one record he points to show Newton selling at 300 pounds on the 19th of April, 1720. On its own, he says that sale would have tripled his money. Now, Professor Levinson says Newton bought again in August subscription. And in 2019, a mathematician published a paper in the Royal Society's history journal called Newton's financial misadventures in the South Sea Bubble.

So, the people who've studied this closely tell different stories about the most famous investor in it. The meme everyone shares is the least certain part of it. Now, keep that in mind because it does matter for us, too. So, let me be fair before I draw any lines, right? XRP isn't a share in a company.

It doesn't pay a dividend, and nobody swapped government debt for it. The XRP ledger is working technology that people use. So, I'm not saying XRP is the South Sea Company. I'm saying the crowd behaves the same way, whether it's crowding into Here's Professor Levinson on what tends to repeat.

And that's all great until you blow it up by layering more and more leverage on top, so that a single adverse event can knock the whole thing down. That's almost sort of step-for-step what happened in the South Sea Bubble, right?

The first lesson is borrowed money. And on the 10th of October, 2025, the data firm CoinGlass posted that in 24 hours, more than 1.6 million traders have been liquidated. A total of about 19 billion dollars and it's called as the largest liquidation of any crypto history. Liquidation just means a borrowed debt was closed automatically because the price moved against it. Now, that's the Duke of Portland's mistake with an app instead of a quill and here's the part that matters most to ordinary holders.

If you own XRP outright with nothing borrowed against it then nobody can force you to sell. The price can fall and that hurts but you actually get to decide what happens next. The second lesson is to ask who's on the other side. In 1720 the gifts to politicians sat in the cashiers books and the book left the country. A big share sits with Ripple and anyone can look at those escrow accounts up on the ledger.

Being able to see it doesn't stop a price falling and you might not like everything you find but it is a world away from a secret book on a boat to the continent. The third lesson is to check the sums like Hutchinson did before you believe any big number for any coin. Ask what would have to be true for this to happen. If nobody can answer that then it's a story it's not a plan and the last lesson is Thomas Guy's. He seems to have known why he owned these shares and he sold in stages when the price stopped making sense.

Now, we can't copy his timing because nobody can but we can copy his method and we can decide our reasons for our limits before the excitement starts. Now, Exchange Alley ended up with a shorter name called Change Alley and it's actually a fairly ordinary little passage in the city of London. According to Patrick Boyle, a blue plaque marks where Jonathan Coffee House stood. The place where people actually crowded into the trade those shares and the coffee house is long gone. The behavior that filed it actually never left.

Right? Here's what I'd like to hear from you. Out of the four warnings from 1720, the borrowed money, the people on the other side, the sums nobody checked or the having no plan before the rush, which one do you see most in crypto? Pick one in the comments guys. If you'd rather watch the old money story hold up against your own coins than the other price chart then that's what the subscription button is for.

Crypto carries risk and past results are no guarantee of future ones guys. This is education not financial. Please, as always, stay bullish.

[music]

Oh.