This article explores how Sign works, its flagship products (such as TokenTable, SignPass and EthSign), its native token (SIGN) and how to trade SIGN on Bybit.

Sign is an omnichain attestation infrastructure that empowers users and developers to verify real-world claims on-chain. Built for a more transparent and decentralized future, it eliminates the need to “just trust” and enables everyone to verify with cryptographic proof.

This article explores how Sign works, its flagship products (such as TokenTable and EthSign), its native token (SIGN) and how to trade SIGN on Bybit.

 is an omnichain attestation protocol designed to make it easy for anyone to verify the authenticity of any claim — 

. Whether it’s a document, credential or user identity, Sign transforms traditional trust models into verifiable, cryptographic attestations. 

Sign’s mission is to replace outdated, opaque validation systems with transparent, 

 proof — enabling a future where “verify” replaces “trust.” Through tools like schema registries and digital signatures, Sign empowers users to bring accountability and integrity to digital interactions.

Sign is developed by the team behind EthSign, a 

-native e-signature and agreement platform. Its core team brings deep experience in 

 development and cross-chain integrations.

The project is backed by top-tier investors, including Sequoia Capital China (now known as HongShan Capital Group), Mirana Ventures, HashKey Capital and Hack VC.

This strategic funding positions Sign as a foundational layer in the web3 infrastructure stack.

Sign allows users to create attestations — cryptographically signed statements that prove the validity of claims, such as credentials, achievements or actions. These digital proofs can be verified by anyone at any time, making them tamperproof and transparent.

Sign’s key technical elements include a schema registry that ensures consistent data formatting, digital signatures proving authenticity, and on- and off-chain attestations with support for revocation or updates

This system acts like a programmable layer for web3, bringing a new level of trust to identity, credentials and data exchange.

TokenTable is Sign’s flagship token distribution platform. It helps projects unlock, distribute and manage tokens transparently and securely at scale.

It uses Sign’s attestation engine to verify token unlocks, 

 and vesting schedules, ensuring traceable, auditable token flows.

SignPass is a blockchain-based identity solution that brings real-world credentials on-chain. One notable implementation is the Sierra Leone PR Card, used for the world’s first government-approved on-chain permanent residency program.

SignPass offers encrypted on-chain records for easy 

 verification, physical ID issuance for daily identity use and streamlined digital application systems for cross-border access.

It showcases the way blockchain can modernize public sector services worldwide.

EthSign is a decentralized contract signing platform that lets users create, sign and store legally binding agreements directly on-chain. It removes intermediaries and ensures documents are immutable and accessible.

EthSign reinforces Sign’s mission by bringing traditional documentation into the realm of verifiable web3 attestations.

The SIGN token is the native utility token powering the Sign ecosystem. It’s used for:

The total supply is capped at 10 billion SIGN, with 1.2 billion tokens in circulation. While the fully diluted valuation (FDV) sits above $746 million as of May 7, the circulating market cap is approximately $89.6 million. SIGN continues to gain traction across exchanges and developer networks.

SIGN is available for trading on Bybit via Spot trading and as a USDT Perpetual contract. Bybit offers up to 75x leverage for the SIGNUSDT Perpetual contract and supports secure, high-liquidity spot trading.

Start exploring the future of attestations with SIGN on Bybit today.

Intermediate

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Sign (SIGN): Web3 protocol for trustless attestation

Compliant trading means following platform rules and avoiding manipulative behavior. Learn more about how you can trade responsibly and compliantly on Bybit.

Crypto trading has come a long way from what used to be the domain of institutional players, and is now open to almost anyone with an internet connection. It’s easier than ever to buy and sell digital assets, try new strategies or build a portfolio from scratch all within minutes.

But with that level of access comes responsibility. As more people join the market, the need for fairness and accountability has become even more important. This isn’t just about price charts or profits — it’s about keeping the playing field level for everyone involved.

At Bybit, we take that responsibility seriously. We're here to offer the tools, safeguards and education you need to help you trade responsibly and to protect the platform from misuse.

This article describes what it actually means to trade compliantly, why it matters — and what can happen if things go off course.

Compliant trading means playing fair, following the platform’s rules, staying within the boundaries of what’s allowed and avoiding anything that could unfairly affect the market.

It’s not about avoiding risk: it’s about knowing what you’re doing, using official tools the right way and making sure your trades aren’t causing harm to yourself or others.

In short, compliant traders don’t just focus on their P&L — they understand that how they conduct themselves while trading matters. Responsible trading protects their accounts, keeps the platform stable and builds long-term credibility in the crypto ecosystem.

Why does responsible and compliant trading matter?

It’s easy to assume that compliance is only something platforms or regulators need to worry about. But in reality, every trader plays a part. When someone attempts to exploit the system — for example, by coordinating mass trades through off-platform channels — the consequences can ripple across the entire market.

In extreme cases, irresponsible trading behavior can:

And if the trades in question are linked to coordinated action, use of fake accounts or external bots? That opens the door to account freezes, compliance reviews and, in some cases, permanent suspension.

Bybit has a responsibility to act when the system is being abused — not just for legal reasons, but in order to protect honest traders.

Common examples of noncompliant or risky behavior

Some traders join Telegram groups or online communities in which KOLs (key opinion leaders) give out coordinated trading instructions (for example, “Buy token A now, sell it in an hour”). This practice isn’t just risky: it often involves a small number of insiders benefiting while the majority end up with losses.

When many people follow the same instruction all at once, it can artificially inflate the price of a low-liquidity token. The KOLs then exit at the top —while others are left with falling prices and unexpected liquidations.

Such a textbook case of market manipulation violates our Terms of Service and, depending upon jurisdiction, could violate financial laws.

Using bots or unverified trading strategies

Some Telegram groups may seem convincing, but trades coordinated off-platform are often unverified and may serve someone else’s agenda. 

 programmed to front-run trades, mimic pump-and-dump strategies or follow unverified signals can trigger compliance red flags and may lead to account restrictions.

Bybit does not support trading bots from unverified sources. They can also trigger flags in our monitoring systems, which may result in account suspension.

Using another person’s account or sharing login credentials — even if it’s with a family member — goes against both Bybit’s policies and global 

(AML) rules. It also opens the door to fraud, loss of funds and irreversible penalties.

Tips for responsible and compliant trading on Bybit

The good news is that there’s a better way to trade — responsibly, safely and with confidence, starting with the right tools, mindset and habits.

Use copy trading the way it’s meant to be used

 is one of Bybit’s most trusted features, and for good reason. It gives users access to professional traders’ strategies while maintaining full transparency. However, it only works if you follow verified 

These traders have been vetted and their stats are fully visible. You can view their P&L, risk settings and trade history. Bybit also provides built-in tools, such as 

 and staking products allow you to earn passive yield with minimal effort. These products are fully backed by our infrastructure and undergo regular audits, and are a compliant way to generate returns without chasing risky trades.

No matter how convincing a Telegram group may sound, remember that trades executed outside of regulated channels are unverified and often unaccountable. They may be coordinated for someone else’s gain.

 offers a wide range of articles and tutorials, covering everything from indicators and oscillators to advanced portfolio strategies. Before following any external signal, it’s worth spending 10 minutes to understand the rationale behind it. In trading, knowledge is your best form of compliance. Before you enter any position, ensure that you fully understand the asset you're trading, the current market conditions and the risks involved.

, never share your login credentials, and always enable two-factor (2FA) authentication. In addition, all trading activity should originate from your own account and remain under your own control.

Bybit’s systems are designed to flag irregular behavior. If your account is found to be engaging in prohibited activity, even unintentionally, you may be:

We take these steps in order to protect the broader user base and to uphold market fairness.

Being compliant doesn’t mean missing out on opportunity. In fact, it’s the opposite. It means you’re using the platform the way it was designed, with safeguards, transparency and trust. Shortcuts might look appealing in the short term, but they rarely end well. The most successful traders on Bybit are the ones who understand risk, stay informed and trade with integrity.

Take the time to learn and use the tools available to you. And remember: protecting your account starts with choosing how you’ll trade.

Beginner

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How to trade compliantly and responsibly on Bybit

Discover how DAI evolved into USDS under the Sky protocol—unlocking passive rewards, scalability, and a new era of DeFi with Sky Token Rewards.

In September 2024, MakerDAO, a pioneering 

 (DeFi) protocol, underwent a significant transformation by rebranding itself as 

 (SKY). This rebranding was part of the project's comprehensive strategy to enhance scalability, user engagement and regulatory compliance. The major changes that came with the rebranding include token upgrades, whereby the platform’s stablecoin, Dai, was upgraded to USDS (Sky Dollar) while the 

Let’s take a deeper look at USDS and its role on the Sky platform.

USDS (United States Dollar Sky) is the upgraded version of the Dai stablecoin, launched under the newly rebranded Sky protocol (formerly MakerDAO).

 Like DAI, USDS is a decentralized, overcollateralized stablecoin designed to maintain a 1:1 peg with the US dollar.

However, USDS significantly improves scalability, user incentives and regulatory positioning, making it a next-generation solution for DeFi.

One of the standout features of USDS as a stablecoin is that it creates 

 opportunities for its investors. With USDS, you can access the Sky Savings Rate (SSR) feature, which allows you to participate in the Sky ecosystem's governance by accumulating Sky Token Rewards (STR) (presented in the form of SKY tokens).

SSR also features a variable automated token accumulation feature, whereby you receive 

 to the SSR program. This passive earning potential offers a major advantage for users seeking yield without complicated 

Sky uses a dynamic model that adds USDS to the SSR pool every few seconds. Over time, the value of sUSDS in the particular pool increases. You can then opt to redeem your sUSDS for USDS, and receive the USDS you initially supplied in addition to the USDS equivalent you’ve accumulated.

These rewards serve as an incentive mechanism, enabling users to passively grow their holdings while supporting the health and stability of the Sky ecosystem.

Upgrading from DAI to USDS is straightforward. Users can visit Sky.money and initiate the upgrade directly through a noncustodial, user-controlled process.

The platform provides a simple interface on which users connect their wallets, exchange their existing DAI for an equal amount of USDS and instantly become eligible for yield accumulation and other Sky ecosystem benefits. There are no fees for the upgrade, and users retain full control of their assets at all times.

USDS isn’t just a stablecoin; it’s an evolution of DeFi money. With passive earning through Sky Token Rewards and a smooth, secure upgrade path, USDS sets a new standard for the way decentralized stablecoins can deliver value and financial empowerment to users worldwide.

USDS and DAI are both decentralized stablecoins originally developed under the MakerDAO ecosystem (now Sky). While they share the same core principle — overcollateralization and the maintenance of a 1:1 peg with the US dollar — USDS represents a major evolution of DAI, introducing additional incentives designed to enhance user experience, scalability and regulatory alignment.

DAI has long been a favorite in the DeFi ecosystem, allowing users to generate stablecoins by locking up crypto collateral such as 

. DAI features a savings program, the DAI Savings Rate (DSR), from which people can earn 

 (sDAI). While the DSR program is still running, upgrading to USDS lets you earn two types of rewards through the SSR program: sUSDS tokens and Sky Token Rewards (STRs).

In addition, USDS is well positioned to meet regulatory requirements, aiming for broader mainstream adoption while maintaining decentralization.

Below is a comparison table between DAI and USDS:

USDS is backed by collateral that’s deposited in Sky vaults by borrowers. In return, the reserves for these vaults are backed by three main assets: 

With a market cap of over $8 billion, USDS is the currently third-largest stablecoin after 

 is more complex than that of typical stablecoins, as it includes liquidation mechanisms and a peg-stability module. However, an audit of USDS’s smart contract in September 2024 didn’t report any significant risks with the stablecoin. Notably, S&P Global Ratings 

 of 4 out of 5, indicating constrained ability to maintain its peg under certain conditions. 

​Additionally, the proposal to include a freeze function for USDS, which bestows upon the Sky protocol the power to halt USDS transfers between wallets, has sparked heated discussions within the community, highlighting the ongoing conundrum of balancing security measures with principles of decentralization.

The evolution of DAI to USDS marks a major leap forward for DeFi. By combining DAI's trusted and overcollateralized model with additional passive earning opportunities through Sky Token Rewards, USDS empowers users to enjoy greater financial benefits with less complexity.

The streamlined upgrade process and stronger regulatory positioning set the stage for broader adoption and a more resilient future. As Sky continues to build, USDS represents more than just a stablecoin — it’s the foundation of an open, accessible and more rewarding financial ecosystem for everyone.

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From DAI to USDS: Unlocking an open Sky for a more rewarding future

Vietnam is establishing a crypto regulatory sandbox and legal framework to bring clarity, security and oversight to its fast-growing digital asset market.

With a tech-savvy population and high rates of crypto adoption, Vietnam is a hotbed of crypto activity. About 17 million of the population own digital assets, as blockchain market flows into Vietnam reached $105 billion from 2023–2024, 

. However, the absence of a clear legal framework has posed challenges for investors, businesses and regulators. Recognizing the need for structured oversight, the Vietnamese government has initiated decisive steps to establish comprehensive regulations for the crypto sector. 

This article delves into Vietnam's current stance on cryptocurrencies, its implementation of a regulatory sandbox, collaborative efforts with industry leaders like Bybit — and the broader implications for traders and the crypto industry.

Vietnam currently lacks a formal legal framework that specifically addresses cryptocurrencies and digital assets. As a result, these digital currencies operate in a regulatory gray zone — neither fully legal nor banned. Existing financial laws only recognize electronic money tied directly to fiat currencies, such as prepaid bank cards and e-wallets, leaving cryptocurrencies like 

This lack of legal clarity has pushed many crypto-related businesses to register in jurisdictions with clearer regulations, such as Singapore and the United States, before operating within Vietnam. A workaround that has led to the loss of potential tax revenue has weakened the competitiveness of Vietnam’s domestic market in the growing digital economy.

Still, despite this uncertainty, Vietnam ranks among the top countries globally for crypto ownership and trading volume, and the stark contrast between widespread adoption and the absence of clear regulations points to the urgent need for a comprehensive legal framework. Recognizing this, the Vietnamese government has begun drafting new regulations to bring clarity and oversight to the digital asset space.

A regulatory sandbox is a controlled environment that allows financial technology innovations to be tested in real-world conditions for a limited time under the watchful eye of regulators. It provides a safe space in which to experiment with new products and services, while ensuring that consumer protection and market stability remain a priority.

How does Vietnam’s regulatory sandbox initiative work?

Vietnam’s regulatory sandbox is designed as a safe, controlled space in which financial technology innovations — including those involving digital assets and cryptocurrencies — can be tested under regulatory supervision. It operates under a multi-agency governance structure, with the 

This committee is responsible for licensing participants, supervising operations, assessing potential risks and ensuring the overall stability of the fintech ecosystem. It works closely with the State Bank of Vietnam (SBV), which was officially assigned to develop the sandbox under newly minted 

, as well as other key agencies like the Ministry of Finance and the Ministry of Public Security.

. The Ministry of Finance is responsible for developing legal guidelines and licensing service providers, while the Ministry of Public Security focuses on combating fraud, money laundering and other criminal activities within the digital asset market. Lastly, the State Bank of Vietnam monitors the impact of digital assets on the country’s monetary policy and overall financial system.

, businesses must undergo a formal assessment process. Eligible participants include credit institutions, independent fintech startups or fintech firms partnering with banks. After passing initial evaluations by the SBV, approved entities receive a registration certificate signed by the prime minister. These businesses then enter a testing phase lasting one to two years that allows regulators to observe how the businesses’ operations function in a live but supervised environment.

 preventing money laundering, managing digital asset transactions, regulating crypto mining activities and establishing oversight for the issuance, ownership and trading of 

. This initiative will roll out gradually, starting with the launch of financial centers in Ho Chi Minh City and Da Nang in 2025. 

 using crypto assets are expected to begin by Jul 1, 2026. 

How Bybit is supporting Vietnam in its path toward regulatory clarity

Bybit is closely collaborating with the Vietnamese government, particularly the Ministry of Finance, to contribute to the development of a regulatory sandbox. This controlled testing environment allows new crypto regulations to be explored and fine-tuned before being rolled out nationwide. During the 

, Nguyen Van Thang, Bybit CEO Ben Zhou emphasized the importance of building a secure, transparent and innovation-friendly crypto ecosystem that protects investors and upholds market integrity.

 is its technical support for Vietnam’s pilot crypto trading platform, which is operating within the sandbox framework. This initiative enables regulators to safely observe real-time crypto transactions and better understand market behavior. Bybit brings its deep expertise in areas like system architecture, transaction monitoring and the implementation of robust compliance tools, such as 

 (KYC) protocols — essential elements for ensuring digital assets aren’t misused, and that regulatory standards are met.

Enabling Vietnam’s crypto infrastructure

But Bybit’s involvement goes beyond technology. The exchange is also focused on empowering Vietnamese regulators through hands-on training and capacity building. These sessions are designed to equip officials with the skills and knowledge needed to effectively oversee a fast-growing crypto market. The 

 has been tasked with working directly alongside Bybit to explore future steps, a move that reflects the Vietnamese government’s confidence in Bybit’s global track record and regulatory experience.

While mainly focused on compliance, this collaboration is also a forward-looking partnership aimed at creating a balanced regulatory environment that nurtures innovation while ensuring financial stability. Bybit is helping Vietnam lay the foundation for a legal framework that can adapt to the rapid evolution of crypto technology. In doing so, the country is firmly positioning itself as a leader in the digital economy.

Why this matters for crypto traders and the industry

Vietnam’s move to establish a crypto regulatory sandbox (and eventually, a full legal framework) means greater security and peace of mind for individual investors and traders. The sandbox enforces strict KYC and AML protocols, reducing the risk of 

. With clear rules expected by May 2025, traders will finally have legal certainty, allowing them to operate confidently without fear of running afoul of unclear or outdated regulations.

For the crypto industry, the sandbox offers a rare opportunity to test new products and services under the watchful eye of regulators without immediately facing the full weight of compliance laws. This creates room for innovation that will help exchanges, token issuers and startups build trust and scale faster. The government’s support for building financial centers in cities like Ho Chi Minh City and Da Nang adds momentum, turning Vietnam into a potential regional hub for crypto businesses and investors.

As the framework takes shape, clearer licensing and operational guidelines will enable crypto platforms to run with greater transparency and reliability, boosting confidence for both institutional players and everyday users. Integration with national data systems will also strengthen transaction monitoring, and reduce risks related to energy-heavy mining operations or illicit activity. With major industry players like Bybit helping to realize this vision, Vietnam is laying the groundwork for a secure and innovation-friendly market.

Ultimately, this regulatory shift benefits everyone: Traders get protection and clarity, and industry players gain a supportive environment in which to grow. Vietnam will be positioning itself as a forward-looking nation that’s ready to welcome the future of finance, attracting foreign investment, driving adoption and unlocking new revenue streams to support economic growth.

Vietnam is taking bold steps toward regulating its crypto market through a structured regulatory sandbox and partnerships with industry leaders like Bybit. These efforts aim to create legal clarity, protect investors and encourage innovation. For traders and businesses alike this marks a turning point, ushering in a safer, more transparent and opportunity-rich environment as Vietnam embraces an alpha role in the global digital economy.

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Crypto regulations in Vietnam: A path toward regulatory clarity

Strategies

Trading

Strategic crypto portfolio rebalancing helps you to achieve a desired predetermined investment allocation or risk-reward ratio. Learn how to combat the psychology of holding onto the winners to limit volatility.

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A strategic investment portfolio is typically created with target goals, like predetermined investment allocation or risk-to-reward ratio. As you trade any assets, price swings inevitably result in differences between the current investment value and the initial cost. Your investment sizes naturally grow or shrink according to the asset values. This shifts the balance of your portfolio in percentage terms for each investment, also changing the risk level of each investment. 

Portfolio rebalancing is a strategic tool that safeguards traders against overexposure to unplanned risk. Rebalancing involves buying or selling assets to return to a preset asset allocation.

We’ll show you how portfolio rebalancing works, why rebalancing regularly is important, and a few of the top rebalancing strategies available. Follow along with our step-by-step guide for specific guidance on how to rebalance your portfolio.

Portfolio rebalancing is to realign the asset weightings within an investment portfolio to rebalance risks. Rebalancing occurs periodically and involves buying or selling cryptocurrencies or other investments held in a portfolio to reach the target level of risk or asset allocation.

Traders can implement portfolio rebalancing alongside existing trading strategies as a risk mitigation technique. You can also use portfolio rebalancing as a stand-alone investment strategy, often praised as a promising alternative to HODLing. 

The primary benefit to regular portfolio rebalancing is the return to a strategically determined level of risk that it provides. However, this isn’t the only benefit. Rebalancing combats the psychology of wanting to hold on to winners — and letting them remain an outsized portion of your portfolio. You’ll also naturally average into a better price on losing positions. By not letting the 

 moves affect your strategy, you eliminate emotions from the equation. From this vantage point, it’s much easier to make a rational, logical evaluation of your risk tolerance and to decide on the necessary trading strategy for your crypto portfolio.

 currencies like Bitcoin and Ether to limit volatility and minimize risk while investing. The more you begin to diversify toward high volatility crypto assets and medium-to-low 

 coins and tokens, the more frequently you may need to rebalance your crypto portfolio. Asset values can plummet or skyrocket in minutes, thereby changing investment sizes quickly. Some seasoned traders in the rapidly evolving crypto world carry out portfolio rebalancing on the hour, every hour. 

Digital assets are among the most suitable investments for regular portfolio rebalancing. Markets never close, meaning you can continue to rebalance at any time of day. Intentional periodic assessments are essential to staying on top of risk and aiming for your predetermined balance of assets. 

There are many available tools to help you track and rebalance your crypto portfolio. Here are a few of them:

 — Connect to over 300 exchanges or wallets and track over 8,000 cryptocurrencies, letting CoinTracker keep a record of all your fees while sorting out tax reports, thanks to the intuitive and easy-to-use interface.

 — Track stocks or cryptocurrencies with Kubera’s highly functional (but as-easy-as-a-spreadsheet-to-operate) portfolio tracker, offering bank and brokerage connection for total investment tracking and management.

— Shrimpy is a crypto portfolio rebalancing tool that offers portfolio tracking, rebalancing, and automated index and copy trading. Automate your own system, or follow another trader.

Here are three common cryptocurrency portfolio rebalancing strategies. The best strategy depends on your portfolio, risk tolerance, diversification goals, and general approach to trading. 

You can test out these strategies on your own portfolio.

For example, the concept of rebalancing revolves around the size allocated to assets within the portfolio. Typically this is considered in percentage terms. For example, if you have a $10,000 portfolio, with $2,500 invested in four different coins, each coin would have a 25% allocation in the portfolio.

Allocation Percentage = Amount invested in a coin / Amount invested in total portfolio

You start out typically with a desired allocation percentage, and then as the value of each cryptocurrency changes, you end up with the actual allocation percentage. Rebalancing is the practice of bringing your actual allocation percentage back in line with the desired allocation percentage.

Periodic portfolio rebalancing is a straightforward, time-based approach to resizing investments. The trader decides an initial investment allocation between various cryptocurrency coins and tokens. 

After a fixed time period — which could be hours, days, or weeks — portfolio assets are bought or sold in the proportions necessary to return to the desired asset allocation. Even if the portfolio is out of balance on a percentage basis, rebalancing doesn’t occur if the time period hasn’t been reached.

: You can choose to divide your portfolio equally between four different digital assets (BTC, ETH, SOL, DOGE). Each coin would take up 25% of your portfolio initially. At your chosen time interval, let’s say one week, you would check if your actual allocation percentage, as determined by the current coin values, has changed from 25%. If it has, then you would buy and sell the assets accordingly to bring each allocation percentage back to your desired 25% level.

Percentage portfolio rebalancing defines absolute percentage-based allocations to investments and a band of allowable deviation. If any of the coins owned rise or fall past the target amount and the tolerated corridor, the trader rebalances the entire portfolio back to the desired allocations.

: Using the previous example, your desired allocation percentage is 25% per coin. You then choose an absolute allowable deviation of +/-5%. This means that the allocation percentage of a coin can move down to 20% or up to 30% of the portfolio without rebalancing. Anything past those bands would require rebalancing.

The portfolio owner sets initial target allocations and a percentage of deviation relative to those allocations, serving as the “threshold.” This method uses a percentage calculation of the threshold rather than an absolute percentage difference.

For example, referencing the previous example, your desired allocation percentage is 25% coin, and your threshold is a 10% deviation. Your allowable deviation in absolute percentage terms is 10% x 25% = 2.5%. So your actual allocation percentage can only go down to 22.5% or up to 27.5%. Any sizes outside of this threshold would be rebalanced.

Another one of the good threshold rebalancing strategies includes if the target allocation is 10% per investment and the threshold is 10%, then rebalancing would occur if the allocation changes by more than 10% of the goal. Ultimately, the idea of threshold rebalancing will normally only be triggered when there is a significant shift

Generally, there are two major types of threshold levels that suit your risk tolerance: 

When the risk-to-reward ratio is high, it naturally translated to the high threshold level. But that also means that you need a decent level of risk management.

Follow this step-by-step guide to learn how to rebalance your cryptocurrency portfolio and manage risks in the volatile crypto market.

Step 1 — Decide Which Type of Portfolio Balancing Suits Your Investment/Trading Style

The trader’s investment strategy and style largely determine the type and frequency of portfolio rebalancing necessary. Higher risk investments — such as volatile coins, newly launched tokens, and those with limited market capitalization — typically require more frequent rebalancing than a portfolio with one or two stable currencies and a single high-risk token or two. Decide which rebalancing strategy suits your unique approach and risk tolerance before moving on to the starting allocation of your investment.

Step 2 — Assign Your Starting Crypto Asset Allocation

Determine the initial investment mix and balance. If you’ve already started trading, then divide up your existing portfolio into the crypto asset allocation you’d prefer based on your risk management strategy and the assets you own. For example, an investor may hold 40% of their portfolio value in a large market capitalization cryptocurrency like BTC, 20% in ETH, and have the remaining 40% invested into two ICOs and two altcoins evenly at 10% each.

Step 3 — Rebalance Your Cryptocurrency Portfolio

If you’re rebalancing based on a schedule using a periodic strategy, then buying and selling the coins or tokens needed to reach your predetermined investment allocation is fairly straightforward. Alternatively, you can use portfolio or threshold rebalancing. Threshold rebalancing involves setting a percentage deviation from your allocation that you don’t want to be breached. Percentage rebalancing adjusts allocations based on absolute changes in your percentage allocation.

Buy and sell the crypto assets that will take your cryptocurrency asset allocation back to your original goals. If you’re rebalancing manually without the help of crypto portfolio rebalancing tools, then you’ll need to try to execute transactions as close together as possible. You’ll also need to log each transaction to compare investment performance at a later stage accurately and to track capital gains for tax purposes if you’re in the U.S. 

Whether or not you need to record all rebalancing transactions depends on your local applicable tax laws. Keeping a record of all trading activity is, however, generally recommended for analysis purposes. For tax purposes, recording rebalancing transactions is essential to maintaining compliance and claiming capital losses or gains.

How Often Should You Rebalance a Portfolio?

Rebalancing a diverse portfolio helps you take profits and realign your risk levels. Research into rebalancing and cryptocurrency portfolio diversification from 

 showed that portfolios with more cryptocurrency coins and tokens had the highest performance potential from hourly portfolio rebalancing. The reported gains in portfolio growth when rebalancing hourly, as opposed to HODLing, rose as high as 234%.

Whether you choose to carry out portfolio rebalancing of your crypto portfolio every hour, once a day, or annually, regular rebalancing is a fundamental component of working within your risk tolerance and maximizing the return on your investments. Decide on a rebalancing strategy today, and consider trying out a few reliable crypto portfolio rebalancing tools. Each one will be suited to a particular trading style and can make rebalancing a portfolio infinitely easier to manage.

How to Rebalance a Cryptocurrency Portfolio Effectively

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How to Rebalance a Cryptocurrency Portfolio Effectively

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