Portfolio Rebalancing
Periodically restoring portfolio to target allocation by selling winners and buying losers.
Rebalancing is a portfolio management strategy where you periodically restore allocation to the original plan — selling what has grown too much and buying what has lagged.
Example:
•Goal: 60% BTC, 30% ETH, 10% alts
•BTC grows 50% → allocation becomes 70/25/5
•You rebalance: sell some BTC, buy ETH and alts
•Return to 60/30/10
When to rebalance:
•Time-based: quarterly or annually
•Value-based: when an asset deviates >5-10% from target
•Combined: most commonly used
Advantages:
•Discipline — no emotional decisions
•"Buy low, sell high" automatically
•Risk control — don't allow excessive concentration
Tax aspect: every rebalancing is a potentially taxable event (gain realization).