Also those sparkles!! How can you realize that effect with a modern camera?
I think you're looking at two effects here, and your title doesnt quite match your content line.
So for dreamy blur you can add a filter that you add on the lens or you can add it in post production.
Types of filter might be labelled mist or soft, and come in a variety of strengths.
In post production there are filters or a number of techniques depending on software used.
For the sparkles, thats often called starburst and is also available as a filter, both physically to add to a lens and in software.
For a rainbow effect you would look for diffraction grating.
Add on filters might be from manufacturers like tiffen: https://tiffen.com/pages/camera-filter-collection
Aso, I've gotten similar effect from blowing gently on a uv filter (so not the lens itself) and drawing a mark with a greasy finger in the direction i wanted.
An easy and budget-friendly way to do it right now is to smear the front of the lens with a greasy coat. Try some Vaseline.
If you have an SLR try doing it over a UV filter so it is easier to wash later.
Spread it by moving your finger moving it in one direction, I mean for example left to right. And the "sparkle" will be top to bottom.
Then, for the diffuse part, tap on the filter Of course this is trial and error.
You can also do this on your phone. However, I do not know how much vaseline resistance is in the lens.
Actually, testing different things in front of the lens on a SLR camera is an interesting exercise. Try a transparent bag covering only a part of the lens. Try some cellophane paper, the barbs of macrame string, etc.
If you try solid objects you need to use a wide aperture. So the exercise is more difficult on the tiny front of a cellphone lens.
My answer may not be one that you can easily implement without the right knowledge or assistance, but it may still interest you.
On the movie Babylon, cinematographer Linus Sandgren had his Lenses tweaked/detuned by Atlas co president Forrest Schultz. Schultz achieved the “dynamic-blooming” effect by carefully and tentatively de-polishing the lenses to obtain micro scratches. These scratches allowed highlights to bloom, without applying any softening on the image.
You may experience a similar effect when wearing a helmet with a slightly scratched visor in the front. If you drove at night you would see the streetlights having a kind of blooming effect, at the location of the scratches.
(More information can be found in the ASC cinematography magazine)