A rebalancing strategy involves adjusting the allocation of assets in a portfolio to maintain a desired risk level and investment objective. In cryptocurrency, this means periodically buying or selling different coins to ensure that each asset remains at a targeted percentage of the overall portfolio.For example, if an investor initially allocates 60% to Bitcoin and 40% to Ethereum, the value of these assets will fluctuate over time. If Bitcoin performs well and its value rises significantly, it might grow to represent 70% of the portfolio. To rebalance, the investor would sell some Bitcoin and buy Ethereum, bringing the allocation back to the original 60/40 split.Rebalancing helps manage risk and can improve long-term returns by preventing overexposure to a single asset. It encourages discipline, as it requires selling assets when prices are high and buying when prices are low, aligning with the principle of “buy low, sell high.” Regular rebalancing can be done at set time intervals or triggered by specific percentage changes in asset values.