Bitcoin suddenly slides 4% as BofA predicts a 20% stock market crash

The price of Bitcoin abruptly dropped 4% from the day's peak on Oct. 30 as the uncertainty in the stock market intensified.

Tech-heavy stock indices performed slightly better in the same three weeks as the Nasdaq dropped 5.8%. While the correlation between Bitcoin and stocks has declined in recent weeks, the slump of risk-on assets could negatively affect cryptocurrencies.

Would a "Risk-off" drive hurt Bitcoin in the short term?

A contested election may lead to a market slump.

Since Oct. 12, while U.S. stock market indices declined by 5% to 6%, Bitcoin rallied by nearly 16%. In the last 18 days, BTC rose from $11,167 to $13,290, massively outperforming gold, stocks and the U.S. dollar.

The confluence of Bitcoin facing a multiyear resistance level at $14,000 and the lack of certainty around risk-on assets could slow BTC's momentum.

If the market uncertainty persists after the election, there is a higher probability that it would place BTC in the low $13,000 region for a prolonged period, which wouldn't necessarily be unhealthy.

"A correction wouldn't necessarily be unhealthy for the Bitcoin market at this point, as that may lead to further accumulation," explained Cointelegraph Markets analyst Michael van de Poppe in his latest Bitcoin price technical analysis.

According to researchers at Santiment, the sentiment around Bitcoin has strengthened in recent weeks and months.

The Bitcoin dominance index has consistently increased, dwarfing both major and small-cap cryptocurrencies.