Diversify to Rebalance

Lastly, having a diversified portfolio allows you to rebalance your portfolio so it doesn’t become overweight in certain coins.

For example, let’s assume you’ve invested in three coins: coin A, coin B and coin C.

You decide to allocate 50% to coin A, 25% to coin B, and 25% to coin C. You further decide to allow the percentages to deviate by 10%. Coin A rockets higher and, as a result, is now 60% of your crypto portfolio. Therefore, you decide to sell off a portion of coin A and buy coins B and C to rebalance back to the 50-25-25 split. This way, you are using the gains from your outperforming crypto to fund the rest of your portfolio.