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

Ethereum’s Utility and “The Merge” Are in Conflict: Mark Cuban

Shark Tank star Mark Cuban recently aired his thoughts on Ethereum’s upcoming “Merge” upgrade. He pointed out how Ethereum’s utility as a smart contract platform and as a deflationary asset are at odds.  In an interview with Altcoin Daily on Sunday, Cuban explained that there is an inverse relationship between deflation and utilization of Ethereum. “If utilization goes up, and the value of a token goes up, then the cost to do something goes up,” he explained. “So you have…

Chainlink to Stick With Ethereum PoS Post-Merge

Early this morning, blockchain protocol Chainlink shared a release outlining its plans following Ethereum's merge upgrade. The platform revealed that it will cease to support the forked versions of the Ethereum chain. Chainlink Stands With the Ethereum Foundation Over the past few weeks, the Ethereum blockchain has been getting ready for its long-awaited shift to the proof-of-stake consensus mechanism. The network’s core devs have dubbed it the merge and set a tentative launch date in the middle of September. Ahead…

US Slaps Sanction on Crypto Mixer Tornado Cash

Tornado Cash is the latest crypto mixer to join the US Department of Treasury’s list of sanctioned organizations. The Department shared the news in a press release on Monday alongside other details of the sanction. In its release, the US Treasury highlighted Tornado Cash’s role in several stolen crypto launders as its primary reason for the sanction. Tornado Cash and Cybercrime Tornado Cash is the second service platform to have received a sanction from the Treasury’s Office of Foreign Assets…

Crypto Lender Hodlnaut Freezes Withdrawals Due to Market Conditions

Holdnaut – a Singapore-based yield generation platform – is the latest crypto company to indefinitely freeze user deposits and withdrawals.  Hodlnaut in Trouble In an announcement on Monday, the firm stated that recent market conditions have forced its hand in order to stabilize its liquidity. The pathway to eventually resuming user withdrawals, it claims,  “will not be a short process.” “We would like to reassure you that this difficult decision was taken for us to focus on stabilizing our liquidity…

How Does KYC Work in the DeFi Space?

Decentralized finance (DeFi) has the potential to reach mainstream adoption and empower people worldwide financially. However, without regulations and identity control, it can easily become a platform for scams, fraud, and money laundering. The paradox is that by introducing stricter control on who can access DeFi products, the industry loses its "decentralization" factor. After all, this is what set it apart from traditional centralized finance (CeFi) in the first place. This is where KYC (Know Your Customer) standards come in…

WMA: Bitcoin Secures $23k, Slope Wallets Get Drained, and Altcoins Lose Ground

Get the weekly summary of crypto market analysis, news, and forecasts! This Week’s Summary The Crypto Market ends the week at a total market capitalization of $1,094 trillion. Bitcoin has dropped by nearly 3% this week. Ethereum lost almost 1% over the past seven days. XRP is down by nearly 5% this past week. Almost all altcoins are trading in the red, with very few exceptions. The DeFi sector maintains the total value protocols (TVL) at around $40 billion. Crypto…

DOGE More Scalable than Bitcoin, Says Elon Musk

Tesla founder and CEO Elon Musk reaffirmed his support for the Doge ecosystem in a Friday interview on the Full Send Podcast. Musk who has always been vocal about his preference for the meme token rehashed his reasons for this.  According to the billionaire, Dogecoin has a far greater transactional capacity than king crypto Bitcoin.  DOGE Is a Better Choice in the Long Run Musk highlighted the transaction times of either blockchain to support his argument. Bitcoin processes transactions in…

Slope Wallet Promises 10% Bounty For Return of Community’s Stolen Funds

The Slope Wallet team has promised a 10% bounty to the anonymous hacker who compromised several thousand Slope users’ wallets earlier this week. In return, Slope would like the hacker to return the other 90% of the stolen goods.  A Promise of Safety In a statement on Friday, Slope called on the hackers to examine its bounty offer for the safe return of user funds. It offered a Solana address to which to send those funds, which is yet to…

An Easy Guide to Initial Gaming Offerings (IGO)

Initial Gaming Offerings, or IGOs, have been gaining in popularity as of late. This guide will explore the ins and outs of IGO investing. The aim of this post is to help you make informed decisions about this investment opportunity.  We'll cover everything from what they are and how they work to the benefits and risks associated with them. At the end of the guide, you will find it easier to assess IGOs on the market. What Are IGOs, and…

Initial Metaverse Offerings (IMO) – A Beginner’s Guide

Initial Metaverse Offerings (IMO) allow businesses to raise money by issuing tokens on the blockchain. IMO offer investors a chance to get in on the ground floor of exciting new projects. Through an IMO, you may provide businesses with the capital they need to get started.  This guide will explore what IMO are, how they work, and what you need to know before investing in one. What Are Initial Metaverse Offerings (IMO)? Initial Metaverse Offerings are a way for blockchain…