When a highly absorbing thermal medium is heated with a focused laser pump beam, diffraction ring patterns can be observed due to self-phase modulation. It is further observed that when the laser power increases, the usual self-phase modulation diffraction patterns change due to formation of a bubble inside the thermal lens created by the focused beam. This phenomenon, called thermal blooming, is the next step to selfphase modulation. A stable bubble is formed using a focused laser beam, and the bubble is characterized using holograms made with a probe beam. A 532 nm Argon-Ion laser is used as the pump and a 633 nm low power He-Ne laser is used as the probe. The thermal medium comprises a mixture of a red dye and isopropyl alcohol. To minimize the optical effects arising from convection, the focused pump is introduced vertically into the liquid sample. The recorded in-line holograms are numerically reconstructed to determine the size and 3d shape of the bubbles. Bubble sizes are monitored as a function of the pump intensity. Once formed, the bubbles can be steered by mechanically deflecting the pump beam or any other laser beam. Finally, Ag nanoparticles are fabricated, examined, and introduced into the thermal medium. The presence of nanoparticle agglomeration around the thermally generated bubbles is tested using a focused probe beam at 405 nm corresponding to the absorption peak of the Ag nanoparticles due to plasmonic resonance. This technique should prove useful in drug delivery systems using nanoparticles agglomerated around microbubbles.