Asset rotation refers to the strategic adjustment of investment holdings within a portfolio. Investors sell underperforming assets to acquire those with better growth prospects or a more suitable risk profile. This active management approach aims to optimize returns and mitigate downside exposure. It represents a dynamic allocation strategy responsive to market conditions.
Context
In cryptocurrency markets, asset rotation frequently occurs as investors move capital between different digital assets based on market trends, technological advancements, or regulatory shifts. For example, capital might shift from large-cap cryptocurrencies to emerging altcoins showing strong momentum. News coverage often highlights these shifts, indicating changing investor sentiment or sector-specific interest. Such movements significantly influence the relative performance of various digital assets.
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