- Gasoline prices fell below $3 per gallon for the first time in 4 years. Will this result in a bullish scenario for crypto?
US consumers received their Thanksgiving gift last week, as average gasoline prices fell to their lowest level in over 4 years. According to GasBuddy, a real-time fuel price aggregator, the national figures dropped to $3 per gallon for the first time since May 2021.
Gas prices notably rose to their highest by over $5 in mid-2022. This occurred as demand surged following the government’s easing of COVID-19 travel restrictions. Additionally, supply chain disruptions from the Russia-Ukraine conflict heavily contributed to the matter.
Average Gasoline Prices Going Under $3
GasBuddy even reported several dozen stations going under $2 per gallon across Texas, Oklahoma, and Colorado. It expects other providers to follow suit if the government sustains or improves current market conditions.
The source attributes the low gas pump prices to lower crude oil prices, supplemented by additional OPEC+ supply and record US oil production. There’s also the softer seasonal fuel demand, which accounts for lower utilization rates.
Patrick De Haan, head of petroleum analysis at GasBuddy, considers the lower gas prices a welcome relief for consumers ahead of the holiday season. He forecasts the decline to carry out until the typical climb in costs during mid-February.
Will Lower Gasoline Prices Affect Crypto?
Lower gas costs affect crypto prices directly and indirectly. Typically, lower fuel prices reduce logistical expenses for industries, especially those involved in transportation. In turn, this helps cool down inflationary pressures.
Cooling inflation offers consumers more purchasing power. Hence, it encourages them to spend more on goods and services, which could reduce the demand for “inflation hedge” assets like Bitcoin (BTC).
On the other hand, low-inflation environments lessen the need for central banks to raise interest rates. Crypto investors and analysts generally view low interest rates as bullish, as such events usually attract investments to risk assets like tech stocks and crypto.
Meanwhile, lower basic commodities and gasoline prices could mean extra capital or liquidity for people. These could empower them to allocate a portion of their funds to various investment vehicles, including crypto.
Moreover, the public commonly views lower gas prices as a sign of a healthier economy. This bullish sentiment naturally entices them to invest their money with confidence.
One may add that lower gasoline prices could lead to higher Bitcoin mining or crypto mining operations for proof-of-work (PoW) coins. However, it should be noted that energy producers do not use refined fuels such as gasoline. Instead, they mainly utilize crude oil, natural gas, and other fossil fuels. Others have already adopted renewable energy due to its environmental benefits and lower costs.
Overall, the potential demand spike from the mentioned scenarios could propel crypto prices higher.
