Portfolio rebalancing involves adjusting the proportions of different assets within a portfolio to maintain a desired risk level or investment strategy. In the context of cryptocurrencies, this means selling or buying various digital assets to ensure they align with your investment goals.Over time, price fluctuations can cause certain cryptocurrencies to dominate your portfolio. For instance, if one coin increases significantly in value, it may constitute a larger percentage of your total holdings than intended. This concentration of risk can be problematic.By rebalancing, investors can take profits from overperforming assets and reinvest them into underperforming ones. This process helps manage risk and can enhance long-term returns. Rebalancing can be done periodically—such as monthly or quarterly—or triggered by specific price movements. Overall, it’s a strategy designed to maintain investment discipline and ensure a balanced approach to holdings.