Top Crypto Portfolio Rebalancing Tools (Automated & Manual)

With the rise in the number of cryptocurrencies every day, our exposure to the coins is also increasing. It is not uncommon to see a lot of beginner crypto investors invest in over 30 coins at a given time.

When I started investing in cryptos, my goal was to be a long-term HODLer. I discovered many great projects which gave promising results but were soon out of the market. In short, I missed booking profits, and as there was no diversification and balancing of my portfolio, I ended up losing a lot of money.

Does it sound like your story?

Or do you also have a lot of crypto investments and want to be more disciplined?

Well, the solution is diversification and rebalancing.

In today’s post, I’m going to talk about rebalancing which I have been testing for a while, and I can confidently say that it is a concept used by the wolves to manage risk and increase the portfolio as the market swings.

Benefits of Crypto Portfolio Rebalancing:

1. Maintain a steady risk level
2. Keep the different percentages of your portfolio for different categories of assets
3. Results are more aligned with goals and expectations

Alright, so I assume you know a bit about portfolio rebalancing, and now you are ready to become more disciplined and grow your investment with proper risk management.

The very first step is to diversify your portfolio. You have to define which asset you would like to invest. You can have diversification based on various factors such as:

• Long-term hold (Ex: BTC, BNB, SOL)
• Top 10 CMC coins
• Coins based on categorization ( Store of Value + Staking + Exchange Coins + AI Blockchains)
• Market Cap
• Hybrid
• Long-term hold + medium hold + Short term hold

Whatever strategy you choose, defines how much time and effort it would require from you. For example, a long-term holding portfolio will not require a lot of intervention from you until something major happens, like an exponential rise in a coin’s value in a short time.

Rebalancing cycle:

The next major thing is to select the rebalancing cycle. In the crypto world, you can have a rebalancing cycle as short as a couple of hours to a few weeks or months. In my case, I prefer keeping it monthly or often based on market conditions.

Benefits of Crypto Portfolio Rebalancing

1. Risk Management: Maintains a steady risk level by preventing any single asset from dominating your portfolio.
2. Disciplined Investing: Enforces a “buy low, sell high” strategy automatically, removing emotional decision-making.
3. Portfolio Alignment: Keeps different percentages of your portfolio allocated to different categories of assets according to your investment strategy.
4. Volatility Harvesting: Takes advantage of crypto market volatility by systematically selling assets that have appreciated and buying those that have declined.
5. Goal Alignment: Ensures your investment results remain aligned with your original goals and expectations.
6. Diversification Maintenance: Preserves your diversification strategy even as market movements shift your asset allocations.
7. Profit Taking: Automatically captures gains from well-performing assets without requiring manual monitoring.

Pros of Rebalancing

1. Automated Strategy: Reduces the need for constant market monitoring and manual trading.
2. Emotion-Free Trading: Eliminates fear and greed from your investment decisions.
3. Systematic Approach: Provides a structured method for portfolio management in a chaotic market.
4. Potential for Enhanced Returns: Can potentially increase overall returns by capitalizing on price movements and mean reversion.
5. Reduced Concentration Risk: Prevents overexposure to any single asset or sector.

Cons of Rebalancing

1. Trading Fees: Frequent rebalancing can incur significant trading fees, potentially eating into returns.
2. Tax Implications: In some jurisdictions, each rebalancing trade may be a taxable event.
3. Opportunity Cost: Selling high-performing assets to buy underperforming ones might limit potential gains during strong bull markets.
4. Complexity: Setting up and maintaining rebalancing strategies can be complex, especially for beginners.
5. Timing Challenges: Determining the optimal rebalancing frequency is difficult and may vary based on market conditions.
6. Technical Requirements: Automated rebalancing requires access to exchanges via API connections, which introduces technical complexity and potential security concerns.
7. May Underperform in Trending Markets: During strong directional markets, a simple buy-and-hold strategy might outperform rebalancing.

Now, it’s time to look at the tools that will help you rebalance your cryptocurrency portfolio.

1. 3Commas

I have used 3Commas for a while, but it was only recently that I found out about its rebalancing feature. In fact, this feature is hidden and a lot of users wouldn’t even realize it until they take advantage of the portfolio feature.

When you create a new portfolio or copy a winning portfolio of someone else, you can apply the rebalancing feature. You can decide how often you want to rebalance your portfolio. In my case, I selected 12 hours.

Now, after every 12 hours, 3commas automatically rebalances my account and buys/sells coins based on my defined portfolio diversification.

3Commas offers $10 as a joining balance which is good enough to help you get started. Once you have seen the result of the portfolio building and rebalancing feature, you can grab any of its subscriptions.

Supported exchanges:

2. Binance Rebalancing bot

Binance’s Rebalancing Bot is a powerful tool that enables users to automatically adjust their cryptocurrency portfolios to maintain their desired asset allocation with ease. It helps manage risk, align with investment objectives, and potentially increase returns by selling overvalued assets and buying undervalued ones.

Key Features:

• Automatic portfolio rebalancing based on your specified allocations
• Two rebalancing triggers: time intervals (from 30 minutes to 28 days) or ratio deviation (0.5% to 5% thresholds)
• No extra fees beyond standard Binance trading fees (25% discount available by paying fees with BNB)
• Minimum investment of approximately 100 USDT per coin for proper functioning

The Rebalancing Bot continuously monitors your portfolio and dynamically adjusts the weightings of different cryptocurrencies. It systematically sells assets that have become overvalued relative to your target allocation and reinvests the proceeds into undervalued assets.

How to Use:

1. Log into your Binance account
2. Navigate to the strategy trading page
3. Select Rebalancing Bot
4. Choose your assets and allocation percentages
5. Set rebalancing parameters (time or ratio)
6. Start the bot

Binance’s Rebalancing Bot is ideal for users who want a simple, cost-effective solution with traditional fixed-allocation rebalancing and are already using the Binance platform.

3. Pionex Rebalancing Tool

Pionex’s Rebalancing Bot is designed for investors who are optimistic about multiple coins simultaneously and are willing to hold coins for a long time to gain value appreciation. It offers both dual-coin and multi-coin modes for different portfolio management needs.

Key Features:

• Dual-Coin Mode: Allocates two coins at a fixed 1:1 ratio by default
• Multi-Coin Mode: Allocates up to 10 different coins with customizable proportions
• Two rebalancing triggers: Periodic (time-based) or Threshold (proportion-based)
• “Choose an index” feature for beginners who don’t know which coins to select
• Advanced settings for trigger prices and rebalance conditions

How to Use Pionex Rebalancing tool:

1. Log into your Pionex account
2. Click CREATE button for rebalancing bot
3. Choose between dual-coin or multi-coin mode
4. Select coins and allocation
5. Set rebalancing parameters
6. Start the bot

Pionex’s Rebalancing Tool offers more flexibility with its dual-coin and multi-coin modes, making it suitable for users who want more allocation options and preset indexes from industry leaders.

4. Coinrule Rebalancing Bot

Coinrule takes a different approach to portfolio rebalancing by using technical indicators, particularly moving averages, to determine which coins to buy or sell. Rather than maintaining fixed allocation percentages, Coinrule identifies which coins are in an uptrend and which are underperforming.

Key Features:

• Indicator-based rebalancing using moving averages
• Pre-built strategy templates for different market conditions
• Drag-and-drop interface for creating custom rules
• Demo exchange with virtual wallet for testing strategies
• Backtesting capabilities to validate strategies against historical data
• Works across multiple cryptocurrency exchanges

Coinrule’s approach is to rebalance your wallet using moving averages to define which coins are trading in an uptrend. It helps you buy these coins periodically while selling those that are underperforming.

How to Use:

1. Create a Coinrule account
2. Choose a pre-built template or create your own strategy
3. Set up rules based on technical indicators
4. Test your strategy in the demo environment
5. Deploy your strategy across supported exchanges

Coinrule stands out with its indicator-based approach and testing capabilities, making it the best choice for technical traders who want sophisticated strategies based on market conditions rather than fixed allocations.

Manual Rebalancing Methods

If you keep your coins in a hardware wallet, you can use one of the portfolio rebalancing Excel sheets and manually balance your portfolio. This approach gives you complete control over your assets but requires more time and effort.

Steps for Manual Rebalancing:

1. Create a Portfolio Spreadsheet
   • List all your cryptocurrency holdings
   • Record the current value of each asset
   • Calculate the current percentage allocation
2. Define Target Allocations
   • Decide what percentage of your portfolio each asset should represent
   • Consider factors like risk tolerance, market cap, and investment goals
3. Calculate Rebalancing Needs
   • Compare current allocations to target allocations
   • Determine which assets need to be bought or sold
4. Execute Trades
   • Sell overweight assets and buy underweight assets
   • Consider transaction fees when making trades
5. Document and Review
   • Record all transactions
   • Review performance regularly
   • Adjust target allocations as needed

Manual rebalancing is ideal for investors who prefer complete control over their portfolio and don’t mind the additional time investment. It’s also suitable for those who hold their assets in cold storage or across multiple platforms.

Conclusion – Which is the best Crypto Rebalancing tool?

Portfolio rebalancing is a proven strategy to manage risk and potentially increase returns in the volatile cryptocurrency market. Whether you choose an automated tool like 3Commas, Binance Rebalancing Bot, Pionex Rebalancing Tool, or Coinrule, or prefer the manual approach, regular rebalancing can help keep your investments aligned with your goals.

Each rebalancing tool offers distinct advantages depending on your needs:

• 3Commas provides a comprehensive solution that works across multiple exchanges
• Binance Rebalancing Bot offers a simple, cost-effective option for Binance users
• Pionex Rebalancing Tool provides flexible allocation options with dual-coin and multi-coin modes
• Coinrule stands out with its indicator-based approach and testing capabilities

For now, you should pick one according to your requirements. I would suggest 3Commas as it offers features that will help you make more money from crypto trading.

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