Portfolio & risk
Rebalancing without emotion
Rebalancing means returning your portfolio to target weights. It sounds dull, which is the point: it is the only built-in way to sell high and buy low without forecasting.
Two methods: calendar and bands
Calendar rebalancing checks at fixed moments, for example quarterly. Band rebalancing acts once a position deviates more than a set percentage from target, for example 25% relative.
The combination works best: look at fixed moments, act only when the deviation is large enough.
What makes crypto special
Crypto moves so hard that a 5% allocation can become 15% after a bull market, so your risk rises exactly when valuations are high.
Conversely, rebalancing into a deep drawdown means buying more. That is the hardest part mentally, which is why the rule must be written down in advance.
Account for costs, spread and tax
Every rebalance costs fees and spread and may be a taxable event. Use new contributions to steer before selling.
Rules differ per country; always check your own situation before a large reweighting.
- Steer with new contributions first
- Only sell when the deviation persists
- Include costs and possible tax in the decision
A concrete example
Target: 70% bitcoin, 20% ethereum, 10% other. After a rally bitcoin sits at 82%. With a 25% relative band the trigger is 87.5%, so you do nothing. At 90% you sell back to 70%.
Calculating this in advance tells you exactly when to act, instead of deciding when emotion peaks.
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Frequently asked questions
How often should I rebalance?
Checking one to four times a year is enough for most investors, acting only on meaningful deviations.
Should I rebalance during a crash?
By rule yes, buying back to target — only if you set that rule in advance and can miss the money.
Is rebalancing taxed?
It depends on your country and situation. Consult an adviser when in doubt.
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