UK petrol crisis and the guzzling of Crypto
MD, Dacxi UK & Europe
The recent debacle on petrol forecourts may have been frustrating for many, but it was a great example of two of the most fundamental economic principles that apply universally. As such it makes an interesting metaphor for people in the cryptosphere.
The first principle is how supply and demand drives prices. Without doubt circumstances led to a lack of supply. In any commodity that is perceived as being essential, lack of supply normally has the knock-on effect of increasing demand through FOMO (fear of missing out), a.k.a. ‘panic buying’.
FOMO is the perfect presentation of the second fundamental economic principle — investor sentiment. In all probability car owners bought fuel they didn’t really need just to be sure they didn’t run out. Another example of this was the ‘Great Toilet Roll Scramble’ at the start of lockdown.
The result was a perfect storm (albeit in a teacup), with the inevitable result being the combination of short supply and investor sentiment causing an upward pressure on prices at the pump. Petrol that was previously 134p per litre soared to over 150p in places. As motorists run down their tanks and supply returning to normal, we should expect a downward price correction. However, if you owned a forecourt, Christmas came early.
Read the full article here: https://dacxi.com/blog/the-future-of-crypto
