Risk rotation describes a shift in investment allocation from assets perceived as higher risk to those considered lower risk, or vice versa, within a portfolio. This adjustment is typically made in response to changing market conditions, economic outlooks, or investor sentiment. It is a strategic maneuver aimed at managing portfolio exposure.
Context
In the context of digital assets, risk rotation is often observed as investors move capital between highly speculative altcoins and more established cryptocurrencies like Bitcoin or Ethereum during periods of market uncertainty. Analysts are closely watching these shifts to gauge prevailing market sentiment and anticipate potential price movements. Understanding risk rotation provides a framework for interpreting market behavior during periods of heightened volatility.
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