Rebalancing
Regularly adjusting asset allocation to stay aligned with a predefined strategy.
Beginner-friendly explanation
Rebalancing means adjusting the percentages of your crypto portfolio. If you want to always have 50% in Bitcoin and 50% in Ethereum, but ETH rises a lot, you can sell some ETH and buy BTC to stay balanced. Example: You had €500 in BTC and €500 in ETH. ETH grows to €700 while BTC stays at €500. You rebalance to have €600 in each again.
Intermediate-level insight
Rebalancing is a periodic operation (weekly, monthly...) that keeps a target allocation. It helps prevent overweighting an asset that has grown too dominant and secures gains. It can be manual or automated, based on specific rules (thresholds, frequency, percentage gap). Example: If a portfolio targets 60% BTC, 30% ETH, 10% stablecoins, a rebalance is triggered when an asset exceeds its target by 5%.
Advanced perspective
Rebalancing is part of active or passive portfolio management. It manages asymmetric risk due to volatility. It can be: calendar-based (fixed time), relative performance-based, or dynamic, depending on market conditions. Advanced quantitative strategies use adaptive thresholds or correlation models to optimize rebalancing timing. Example: An algorithmic portfolio tracks weekly performance deviations. If an asset exceeds 2 standard deviations above average, an automatic rebalance is triggered.
Portfolio Management
rebalancing, portfolio, asset management, weighting, target allocation, automation, risk, asymmetry, threshold, return