Strategic rebalancing is the systematic adjustment of an investment portfolio’s asset allocation to maintain its target risk and return profile. This process involves selling assets that have grown beyond their target weight and buying those that have fallen below, thereby realigning the portfolio with its original objectives. It is a disciplined approach to portfolio management.
Context
In cryptocurrency portfolios, strategic rebalancing is frequently discussed as a method to manage the inherent volatility of digital assets and capture gains while controlling downside risk. Market participants debate optimal rebalancing frequencies and the impact of rebalancing on market liquidity. Analyzing rebalancing strategies provides insight into how investors manage their exposure to fluctuating asset prices.
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