Cryptocurrency portfolio rebalancing and we continue the cycle of training articles on the competent formation of a cryptocurrency portfolio. In our previous materials, we have analyzed in detail the phenomenon of “correlation of digital currencies”. If you want to make a profit, then don‘t forget to constantly monitor the latest correlation data.

Today we are starting a series of articles on such an equally important concept as “cryptocurrency portfolio rebalancing”. But first, the term “investment horizon” should be introduced, which is closely related to rebalancing. The horizon of investment is one of the fundamental things necessary for the competent formation of a portfolio. It can be several days or decades. It depends on his choice in many ways whether you will have a profit or not.

Short-term investment

Short-term investment is very popular at the moment. It is customary to divide such people into two types: scalpers (those who carry out quick transactions with minimal profit) and intraday traders (those who trade within one day). This type of investment is more suitable for professionals, since this type of trading requires maximum concentration, constant monitoring and extensive experience. Any mistake – and there are no more funds in your account. Here, the user is required to have his assets constantly on the exchange, which exposes him to additional risk.

With this type of investment, you don’t need to set yourself sky-high goals. For example, a profit of 5% to 10% in one day would be an excellent result. Don’t forget to lay down risks, therefore placing a stop order will be a reasonable step on your part.

Investment horizon

If we consider longer trading, then it can be compared with a more familiar investment in the understanding of the average user. The investment period can be a week, a month or even a year. 

The choice of investment horizon largely depends on how much you want to earn, how much you are willing to take risks and how long you are willing to wait. Consider the psychology of trade. In addition, do not forget that self-discipline is one of the most important qualities. If you reach the goal, it is important to close the portfolio and then sum up.

As mentioned earlier, cryptocurrency portfolio rebalancing depends on the investment horizon. Before you carry it out, you need to carefully consider the plan in advance.

Here are a couple of simple examples:

  • Alternatively, you can continue to stick to the percentage of asset groups that you have now. If you have a portfolio with proportions of 25% / 50% / 25% (moderate), then stick to the plan until the end of the target period. If there is a skew, then sell the extra coins and buy the missing ones until the desired balance is established.

How often should cryptocurrency portfolio rebalancing be done?

The following factors should be considered here:

  • Investment horizon. For example, if there are long-term portfolios, at least once a month. If medium-term – then every week;
  • Proportions. If the asset balance was 50/50, and then in a short period of time it became 65/35, then you need to urgently rebalance;
  • News background. Watch the news carefully. There is a chance to predict in advance when the coin will soar in price, and when it will fall.

The user must decide what to do after cryptocurrency portfolio rebalancing. You can withdraw funds, reinvest them, or leave everything as it is. In the following articles, we will focus on specific rebalancing cases and find out if there are pitfalls here.

This article is not a recommendation for investment or investment in cryptocurrencies, as well as perceived as investment advice. Be careful, because investing in cryptocurrencies is very risky and you need to consult with your financial advisor. Past earnings do not guarantee future earnings. is a fully automated cryptocurrency portfolio management laboratory. Analysis of the cryptocurrencies correlation, searching for the optimal cryptocurrency portfolio weights. Uses crypto trading bots and the auto efficient crypto portfolio index.

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