Dynamic rebalancing refers to the process of adjusting the allocation of different assets within a cryptocurrency portfolio to maintain a desired risk level or investment strategy. Over time, the values of assets can fluctuate significantly, leading to a skewed allocation that may not align with the investor’s goals.For instance, if an investor initially holds 50% Bitcoin and 50% Ethereum, a substantial rise in Bitcoin’s price could increase its share to 70%. To rebalance, the investor would sell some Bitcoin and buy Ethereum to restore the original 50/50 split. This approach helps in managing risk and optimizing returns by ensuring that no single asset dominates the portfolio. Dynamic rebalancing can be done manually or through automated trading systems, allowing for timely adjustments based on market conditions or predefined thresholds.Overall, the main goal is to keep the investment aligned with the investor’s strategy, adapting to both market dynamics and personal goals.