Portfolio rebalancing is a simple strategy which has been used by institutions in the traditional financial system for decades. Billions of investment dollars leverage this powerful way to reduce risk, harvest value from volatility, and potentially boost returns.

Our team has an entire telegram group dedicated to portfolio rebalancing. We encourage you to join the group here.

How to rebalance a portfolio

To better understand the process of rebalancing a portfolio, let’s look at a simple example from a practical situation.

Imagine you have 4 different cryptocurrencies in your portfolio: BTC, ETH, XRP, and LTC. For the sake of simplicity, we will say our goal is to hold equal value in each of these crypto assets. That means each asset will have a 25% allocation or “weight.” If the size of our portfolio was $100, we would essentially have $25 in each of these 4 assets.