In the crypto context
Zooming in on the composition of your crypto portfolio, the logic should work the same way. The difference is that, with the typical volatility of the sector, any oversight can distort the portfolio even more quickly.💥💥💥💥💥💥💥
Imagine a hypothetical portfolio structured as follows: 40% in bitcoin, 30% in ether, and 30% in other altcoins. If one of these positions, for example in altcoins, appreciates significantly, becoming a larger weight than defined in the plan, it is time to reassess. #BinanceAlphaAlert
In this case, the first step is to determine how much deviation justifies the movement. I personally tend to rely on a 5% variation.💥💥💥💥💥💥#越南加密政策
Suppose your altcoins (initially 30%) jump to 40% of the portfolio during altseason. This deviation of 10 percentage points (well above your 5% limit) means you now have 40% of the capital exposed to the most volatile assets in the crypto sphere, exactly when the risk of correction is highest.
How to protect yourself? By selling part of the position to reduce the weight in the portfolio. The proceeds from the sale can be reinvested or kept in cash as a margin to take advantage of future opportunities with more liquidity.🥂🥂🥂
Another way to rebalance is to consider the profile of the assets within the crypto portfolio itself. I tend to categorize my positions by factors such as technology, sector, or function — for example, infrastructure tokens, DeFi protocols, or assets linked to RWA (tokenization of real-world assets).
This organization helps keep the portfolio aligned with the original plan, even when the entire market is booming.
Ultimately, rebalancing is a way to protect gains, avoid excesses, and keep the portfolio true to what was defined before the market's mood swings.
It's not simple, it requires energy, discipline, and strategy. But the rewards come. $BTC
