Avalanche price has AVAX bulls doubting support with ECB set to unwind portfolio

Avalanche price is starting to show signs of a correction ahead.
AVAX sees traders pricing in the ECB entering the market to sell off assets.
With ample supply hitting the market on both sides of the Atlantic now, a lower price is valid.

Avalanche (AVAX) price and other risk assets such as altcoins, cryptocurrencies and equities are due for a leg lower this week. The big motivation for that sell-off comes on the back of the European Central Bank (ECB), which is set to offload a big portion of its inflated balance sheet. The ECB balance sheet carries roughly 7.8 trillion Euros in assets that it bought to support the European economy since the subprime crisis.

Avalanche price set to nosedive as ECB begins quantitative tightening

Avalanche price and in general risk assets are set to take a nosedive with the ECB making its first steps in the market as a seller. The ECB has roughly 8 trillion Euros to sell in bonds and equities that it bought since the Subprime Crisis to support Europe through its sovereign debt crisis and the covid economic collapse. With the market set to be swamped with supply, prices will need to be readjusted with a lower valuation for equities and cryptocurrencies as a final result.

AVAX thus is set to break below the area between $17.80 and $16.80, which offered quite some supportive elements. Once those break under pressure a rundown toward $14.50 looks to be the only possible outcome. If traders thus need to put a number on the ECB unwinding its portfolio, this means that a rough 20% decline is pricing in the excess supply that will be hitting the market.

AVAX/USD daily chart

Should bulls decide to be stubborn and keep underpinning AVAX, a squeeze could be underway. That would mean that price action would quickly and quite steeply jump higher toward $22. In general, that means a 23% jump in just a few days in case bulls are able to seize control of the price action.

Share: Cryptos feed

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Join Telegram