Oil and Bitcoin rebounded in tandem after falling to record lows earlier this week.
International benchmark Brent crude surged more than 11 percent to $37.13 per barrel after its most significant fall since the 1991 Gulf War on Monday. On the other hand, an entirely uncorrelated Bitcoin soared by a modest 2 percent to $8,093 after the New York morning bell.
The assets’ retracement to the upside matched sentiments with equities. Markets in Europe and Asia staged a relief rally Tuesday, while US index Dow Jones surged by 800 points to promise a comeback. Experts noted that the upside break in all the beaten-down assets came on President Donald Trump’s plans to introduce “payroll tax cut” for the economy that is hit by the COVID-19 outbreak.

Our pathetic, slow moving Federal Reserve, headed by Jay Powell, who raised rates too fast and lowered too late, should get our Fed Rate down to the levels of our competitor nations. They now have as much as a two point advantage, with even bigger currency help. Also, stimulate!
— Donald J. Trump (@realDonaldTrump) March 10, 2020

But oil prices rose amidst the trickiest of the tricky situations. It pared gains shortly after Saudi Aramco CEO Amin Nasser threatened to boost their crude output by 20 percent and supply 12.3 million barrels per day in April. His statement came in the wake of an ongoing price tussle between Saudia Arabia and Russia.
Analysts termed the oil rebound as a dead cat bounce, which means a temporary recovery in an asset’s prices after a large decline. They ruled out that the White House’s relief package to support the economy hit by Coronavirus and the Saudi-Russia price war created an artificial upside sentiment in an otherwise oversupplied oil market.
That also left bitcoin in an equally tricky situation.
Bitcoin’s Dead Cat Bounce
The benchmark cryptocurrency bounced back on the same day of the “payroll tax cut” announcement – a dead cat bounce. But the short-term relief did not improve the economic outlook. Investors remained cautious about the spreading of the Coronavirus, and the outcome of the Saudi-Russia oil price war.
So it appears, both oil and bitcoin got marred by the same set of global catalysts. Meanwhile, day traders found short-term opportunities in their overly-volatile markets, sending their prices upward on Tuesday.
Bitcoin prices against Oil | Source: TradingView.com
The close proximation between bitcoin’s relief rally and President Trump’s stimulus package announcement shed doubts on the cryptocurrency’s potential to deliver a bull run. It summed up one important thing: traders and investors are clueless. They are merely exploring short-term opportunities in volatile markets as last resort to mitigate their losses.
Take bitcoin’s options-based market, for instance, which on Monday logged its biggest volume day at $200 million, according to Skew.

All time high for bitcoin options volumes yesterday with nearly $200mln trading pic.twitter.com/dwS2hlqbnl
— skew (@skewdotcom) March 10, 2020

If investors can pump oil prices despite its shortcomings as an asset, then they can do the same to a relatively riskier bitcoin, even though it has failed entirely to serve as a hedge against the Coronavirus epidemic. To them, it is all about finding intraday opportunities amidst never-seen-before market conditions.
Oil has to fall despite the government’s package support because the core issue between Saudi Arabia and Russia remains unsolved. Could bitcoin’s upside sustain on stimulus announcements, too? Very unlikely.