crypto investment

HodlBot automatically rebalances your portfolio to keep it on track, saving you time. Portfolio rebalances generally lead to risk mitigation and improved returns. Ultimately, portfolio rebalancing depends on your unique financial profile. If you are a young investor with several decades of employment to come, you may be able to manage a riskier portfolio with longer rebalance periods.

Take note that these studies used the exact bid-ask data and transaction fees from specific cryptocurrency exchanges. Traders using aggregated data from TradingView or CoinMarketCap may end up with wildly inaccurate calculations. Also, cryptocurrency exchanges have different fees and asset prices, which can affect the portfolio’s performance. A secondstudyanalyzed the impact of different thresholds on a portfolio’s performance. The study used thresholds ranging from 1% to 50% to identify a trend.

Crypto Portfolio Rebalancing: Pros and Cons

Altcrypto portfolio rebalancing and cryptocurrency financial instruments are frequently included in portfolios together with other diverse assets. The only difference between it and a conventional investment portfolio is that you are only investing in one asset type. Using a spreadsheet, you can manually keep track of your cryptocurrency holdings and profits, or you can utilize specialist tools and software. Trackers are necessary for day traders and other short-term investors, but they are also beneficial for HODLers and long-term investors.

Once connected to an exchange account, Shrimpy takes care of the rest for its users. Simply sign up and create a diversified crypto portfolio that aligns with your financial goals. CryptoSimple offers a simple and user-friendly platform to make investing in cryptocurrency accessible to everyone. There are no account minimums, and the fees are transparent and straightforward. While investing in cryptocurrency can be a high-risk, high-reward endeavor, understanding and managing the risks can lead to potentially significant returns. Volatility, which refers to the rate and magnitude of fluctuations in the price of a cryptocurrency, is an inherent aspect of the crypto market.

How does crypto portfolio rebalancing work?

If a random altcoin jumps 300% in value, you might want to take profits and secure your win. This could be a stable giant such as Bitcoin or a volatile altcoin such as Ethereum. By creating a portfolio, you can evaluate the past and future performance of your coins. Creating a portfolio will allow you to connect it to your Exchange balance and buy all the coins you need with one click.


It has the ability to connect to 20 exchanges and numerous wallets, including Binance. Both a free and premium version are available, however trading is not possible within the program. This helps to reduce risk by ensuring that your portfolio remains diversified and does not become too heavily exposed to any one asset.

How To Start Trading Cryptocurrency for Beginners (

Let’s say that I have invested in a crypto portfolio made of Bitcoin and a couple of altcoins. I decided to invest 50% of my capital in Bitcoin, and evenly split the remaining 50% into Ethereum and Chainlink. Portfolio rebalancing is a strategy that enables investors to balance the scale between risk and profit by readjusting asset allocations. Periodical rebalancing makes it possible to retain one’s original asset allocation weightings, which in return, helps with sticking to specific risk targets. Without the help of any tool, you’ll have to rebalance your portfolio manually.

  • One of the best tools for that tricky endeavour but also maintaining diversification is portfolio rebalancing.
  • By creating a portfolio, you can evaluate the past and future performance of your coins.
  • While that makes them perfect for making large profits, it also introduces the risk of losing everything if you can’t react fast enough.
  • It’s difficult to find new coins these days that focus solely on payments.

Buying your first bitcoin , ether , or other cryptocurrency is all it takes to get started investing in cryptocurrencies. While some investors favor purchasing and keeping the biggest cryptocurrencies, others choose to explore with alternative cryptocurrencies. By carefully considering your asset diversification and routinely balancing your cryptocurrency portfolio, you are more likely to succeed. There are various ways to do this depending on your level of risk tolerance. It’s not difficult to balance your portfolio, and the results could actually be profitable. Trading bots are an ever-popular way to manage crypto trades and investments.

Although it features a portfolio option, CoinGecko is primarily recognized for its bitcoin price tracking. If you currently use CoinGecko frequently, the tracker is worthwhile to test as well. Strategically allocate new funds to prevent favoring any one sector of your portfolio over another.

This will allow you to a new portfolio ETH and pick which assets you’ll invest in. Higher frequency rebalancing incurs higher transaction costs but leads to lower portfolio drift. Lower frequency rebalancing offers lower transaction fees, but at the cost of higher portfolio drift. Which option you choose depends on how liberal your portfolio should be with drifting from its original allocation.

Similarly, if the allocation drifts by 10% during any intermediate day, the investor will not rebalance their portfolio. In short, the trader only rebalances their portfolio when the threshold requirement is met during the rebalancing date. Finally, CryptoSimple’s portfolio rebalancing feature simplifies investing. It takes the guesswork out of managing a cryptocurrency portfolio, making it easier for investors to focus on their financial goals.

For example, the US Internal Revenue Service recently classified cryptocurrencies as assets similar to property. The study concluded that portfolios with shorter rebalance time intervals outperform those with longer intervals, especially for portfolios with more assets. The figure below shows how a rebalance period of 1 hour yielded the highest returns.

In this section you can adjust the stop loss time period, the threshold after which the stop loss order activates, and the stablecoin currency into which your assets will convert. Once you pick your assets it’s time to set allocation targets for each asset. In the picture above, you’ll see that I have set a 50%, 25%, 15%, and 10% target allocation for Bitcoin, Ethereum, Binance Coin, and Cardano respectively. If I hold all my capital in crypto and the market breaks records, I’ll see a nice boost to my portfolio. But a simple retrace is enough for my portfolio to bleed and experience a 20% fall. If I want to protect my capital and ensure profits, I need to exchange a portion of my tokens for stablecoins.

The study compared the HODL to hourly, daily, weekly, and monthly rebalancing strategies for cryptocurrency portfolios of two, four, six, eight, and ten assets. The rebalancing of a portfolio, be it a traditional or a crypto portfolio, involves buying and selling assets within your portfolio to maintain the original asset allocation and level of risk. This article is contributed by, with the help of Holderlab, you can automate your strategy for automatically rebalancing the cryptocurrency portfolio. You can choose manual, periodic or threshold rebalancing of the near-currency portfolio. They tested the results of buying a random selection of 2-10 cryptocurrency assets of a period of time and found that most scenarios were beneficial to rebalancers.

It’s been a volatile year for the market: These are the key things to know before rebalancing your portfolio – CNBC

It’s been a volatile year for the market: These are the key things to know before rebalancing your portfolio.

Posted: Tue, 29 Nov 2022 08:00:00 GMT [source]

Instead of featuring equities and fixed income, however, a crypto portfolio simply features a range of different cryptos — like Bitcoin , Chainlink , Ethereum , Dash , and others. For example, some money managers encourage investors to prune asset classes by as little as 5% when targets are overgrown. On the other hand, instead of selecting a monthly or quarterly structure, you can also choose to rebalance at set allocation points (i.e., when your assets fluctuate past a certain percentage). In this article, we’ll cover what you need to know about portfolio rebalancing, including various strategies to use and when to consider adjusting your crypto portfolio. ???? CPPI works off the idea that the investor has a certain amount of money they are wanting to risk more or less than the rest of their portfolio. Using mathematical equations, we can determine how much of their assets should be put in riskier assets such as stocks or crypto and how many in no-risk assets such as risk-free securities.


With enough assets, the effects of a losing asset are negligible compared to your total capital. Shrimpy helps thousands of crypto investors manage their portfolio in one place. There’s a risk of volatility, and even security risks from malicious attacks. Investing in promising ventures is key to building new and innovative applications with blockchain, but it’s equally important to make sure you’re betting on the right horse in the long-term.

Is rebalancing better than holding?

The constant-mix rebalancing strategy outperforms buy-and-hold during these up and down moves. Constant-mix rebalances during market volatility, buying on the dips as well as selling on the rallies.