The Nikkei 225 plunged after Japan's asset-price bubble peaked in 1989.
The index reached its all-time closing high of 38,915.87 on December 29, 1989. It then entered a prolonged decline as Japan's extraordinarily expensive property and equity markets deflated. The Nikkei became a central measure of the country’s “lost decades” of weak growth and financial repair.
The bubble had been fueled by abundant credit, rising land prices, and strong optimism about Japanese corporations. When monetary policy tightened and asset prices turned, banks were left with bad loans and borrowers with excessive debt. Falling collateral values made the adjustment last far longer than a short trading panic.
The Nikkei's decline is often called a crash, but it was also a drawn-out structural collapse. The index did not regain its 1989 closing high until 2024. TOPIX is another important Japanese benchmark, but the Nikkei 225 is the index associated with the famous 1989 peak.