Rebalancing
Periodically adjusting your cryptocurrency portfolio to restore your original target allocation.
Explained Simply
Rebalancing is the practice of buying and selling assets to return your portfolio to its intended allocation. As crypto prices shift, your actual allocation drifts from your target. For example, if Bitcoin rallies hard, it may grow from 50% to 70% of your portfolio. Rebalancing forces you to sell high and buy low systematically. Common approaches include time-based rebalancing (monthly or quarterly) and threshold-based rebalancing (when any asset drifts more than 5-10% from its target).
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