Rebalancing the Portfolio or Buy & Hold? A Comparison Between Crypto Investments Strategies

Blockchain and cryptocurrencies have attracted an outstanding amount of interest and money over the years. However, the popularity of an asset does not automatically indicate that investing in it is easy.

If you don’t know how to distinguish between reputable cryptocurrency suggestions and scammers, you’ll have a hard time making a profit. New traders often have many questions and have no idea where to begin when they first enter the market.

Different investors tend to prefer different investment strategies for cryptocurrencies. Today we will look into two prevalent approaches: buy & hold versus portfolio rebalancing.

The Passive Strategy: Buy and Hold

Many cryptocurrency investors buy and retain their holdings until they decide to sell. When it comes to technical analysis, these investors may not employ stop-loss orders in some circumstances.

Traders skilled in technical analysis may opt to enter cryptocurrency trades when small or significant price retracements are seen in the price chart. A break of resistance is a favorite entry point for other traders.

Cryptocurrency “Buy and Hold” is one of the most straightforward strategies to practice. It’s as simple as purchasing tokens and keeping your private key safe. Adding a stop-loss or a take-profit to your transaction is not required.

Investing in a successful long-term token eliminates the need to perfectly time the market. One of the most nerve-wracking aspects of cryptocurrency trading is figuring out when the market will go up or down. What is the best time to invest in Bitcoin? What about Ether? These questions generate concern and stress.

Additionally, those who trade cryptocurrencies regularly must constantly re-evaluate their entry points to avoid losing money. This method is more time-consuming and stressful. Often, it isn’t easy to get a suitable starting point. To locate a solid buy-in opportunity, you must wait for the market to change.

The Active Approach: Rebalancing the Portfolio

Conventional wisdom advises rebalancing your portfolio when the crypto section of your investment portfolio has grown considerably in value. 

Some financial experts even advocate selling your portfolio’s most successful assets, such as high-flying tokens. Selling certain investments and acquiring new ones is the process of rebalancing your portfolio to reflect your desired asset allocation. 

In addition to increasing the portfolio’s diversity, rebalancing can reduce the portfolio’s dependence on a single token or group of closely linked coins (e.g., memecoins).

While this technique sounds reasonable, it often faces a sad truth: portfolio rebalancing can be highly time-consuming. Since most retail investors typically do not trade for a living and have a primary job keeping them busy during the day, rebalancing investments can sound hard.

Some crypto projects have recently started to offer automatic systems to rebalance a crypto portfolio. Let us mention one of these initiatives in the following section.

Automating Portfolio Rebalancing with Shrimpy

Automated portfolio management platform Shrimpy allows long-term portfolio tracking and rebalancing. Members of Shrimpy may trade crypto indexes and invest to maximize profits. 

It is possible to trade on many crypto exchanges simultaneously on Shrimpy. You may use percentages and statistics to divide your crypto assets on the webpage. Depending on market conditions, the algorithm may either divide your coins manually or automatically. 

Users may also develop a portfolio plan, assess performance, study the market, and duplicate an existing strategy using this platform. In addition, users can create an index across all exchanges and trade it separately.

To rebalance your portfolio, click on the “Automation” button in your portfolio. If you want to diversify your portfolio, the platform will do it automatically. 

Instead, you might choose to rebalance at a later date. Your dashboard will always display the option “Rebalance Now” in this situation to let you trigger the procedure.

Shrimpy will also set the parameters for the portfolio’s automation. The platform likewise blocks automation that is no longer being used. 

Social trading features are also subject to the same mechanism. For example, setting up a portfolio that mirrors a trader’s moves is possible. By unfollowing the trader, though, you may prevent your portfolio from being automatically used for this purpose.

Final Thoughts

This article clarified how different strategies could achieve a good result in the crypto market. While conducting your own research on the sector is essential, we are constantly reminded how portfolio balancing can be an interesting approach.

Bitcoin live price
price change

The issue with rebalancing is generally dependent on the stress and time-consuming operations that come with it. For this reason, investors frequently look for automated solutions, such as those offered by Shrimpy.

Stay up to date with our latest articles

More posts

India Leads 26 Other Countries in Terms of Play-to-Earn Adoption

According to a recent NFT research, India ranks first among 26 countries on the basis of play-to-earn (P2E) gaming adoption. Indian Players Outnumber Hong Kong's and UAE's As per the survey, approximately 34% of respondents in India have experience with play-to-earn games. To be clear, play-to-earn games are blockchain-based games in which players receive incentives with real-world value. Since the outbreak of the pandemic and the rise of the work-from-home culture in India, the popularity of P2E games has soared.…

Cynthia Lummis Drops Reveal Date for Landmark Crypto Legislation

Senator Cynthia Lummis (R-WY) has given a specific date for when her long-awaited crypto regulator bill will be unveiled. The legislation will help to sort cryptocurrencies under appropriate regulatory labels and federal jurisdictions. According to a tweet from the senator on Friday, the final version of her bill will be released on Tuesday, June 7th. Lummis has spent months working on the bill alongside Senator Kirsten Gillibrand (D-NY), announcing it as early December 2021. The bill will reportedly provide sweeping…

Cardano Founder Lobbies for Favorable Laws in Washington

Cardano Founder Charles Hoskinson has shared details of a week-long trip to Washington D.C, where he met with US lawmakers to discuss crypto-related policies. In a Youtube video, Hoskinson related his conversations which he says are another step towards changing how regulatory entities view the crypto industry. Crypto Policies in Need of Major Work Charles Hoskinson has reportedly spent the past few days mulling over the best course for regulation. In fairness, Hoskinson has always pushed clarity in government interactions…

Terra Holders Approve Proposal to Burn 1B UST from Community Pool

Terraform Labs has announced plans to burn 1.3B UST from the community pool following a successful governance vote. After the "Rebirth of Terra" passed some days ago - the burn proposal is the latest in Terra's ultimate revival plan.  Terra will Absorb the UST Supply On Thursday, the burn idea, proposal 1747, passed with staggering support from the Terra community. 99.3% of participants in the vote (154.579 million) pushed for TFL to destroy a huge part of the UST supply. …

How Can You Determine the Rarity of an NFT?

The rarity of a non-fungible token (NFT) is one of the most often debated topics on the internet. The rarity of an NFT is one of the most critical elements in determining its value. Understanding how rarity works is a significant advantage for anyone investing in the NFT market. How can traders learn to measure this feature for any digital asset? Our guide today will share more insight on this critical aspect. Is It Possible to Measure Rarity? There has…

Twitter Agrees to Pay $150 million Fine for Invading Users’ Privacy

Twitter has consented to pay a $150 million sanction to the US Department of Justice (DOJ) and the Federal Trade Commission (FTC). The payment is a settlement for an invasion of privacy charge by the US government. The complainant maintained that Twitter had released users' private information to help advert companies target customers. The Breach Explained Per a complaint on Thursday, the Social Media behemoth allegedly retrieved customers' cell numbers and email info under false pretenses. According to the charge, …

Most NoCoiners Simply Don’t Understand Bitcoin, Finds Block Study

Jack Dorsey’s financial company Block has unveiled a survey from January examining top reasons that people don’t buy Bitcoin. The top reason, cited by 51% of respondents, was that they simply don’t understand it well enough. Conducted in partnership with Wakefield Research, the study surveyed 9500 people across 14 different countries. Besides the lack of knowledge, other common reasons for avoiding Bitcoin included cybersecurity risks (32%) and price volatility (30%). Among those that refused to buy Bitcoin despite sufficient knowledge,…

Federal Reserve Vice Chair Backs CBDC Issuance, Despite Republican Backlash

Lael Brainard – vice chairwoman of the Federal Reserve – showed support for a US CBDC at the House Financial Services Committee hearing on Thursday. She believes one could bring more efficiency to the financial system, but Republicans are staunchly opposed. Potential Need for a CBDC In advance of the hearing, Brainard issued a written statement discussing the pros and cons of a CBDC in the United States. When framing her argument, she first acknowledged the recent instability of private…

Binance, FTX and Others Pledge Support for Rebirth of Terra

Several of the world’s major exchanges have declared their support for Terraform’s reintroduction of the Terra chain as Terra 2.0. Likewise, participants in the network responded positively to the latest in a string of revival strategies from CEO Kwon Do-Hyeong. Terra Revival Plan Receives the Green Light Algorithmic stablecoin UST’s depegging kicked off a series of events that led to the Terra ecosystem’s record collapse. Although most of the crypto-industry had written off the project, Do-Kwon relentlessly pursued its salvation.…

1inch Integrates With Travala to Allow Travel Bookings With 1INCH Token

The popular DEX aggregator 1inch has entered a partnership with Travala.com to integrate 1INCH token into its platform. Holders will be able to book homes, hotels, airlines, and other activities using the governance token. According to a blog post from 1INCH, the partnership is meant to boost 1INCH token’s adoption and expand awareness of the network. Like other governance tokens, it allows for users to vote on the protocol’s parameters in a relatively decentralized fashion. It also expands its utility…