Imagine you have a small garden with various types of plants, such as chili, tomatoes, spinach, and corn, that were initially planted with a balanced composition. Over time, the chili grows vigorously and dominates, while the spinach wilts. If left unchecked, your garden will become an unhealthy 'chili monoculture.'
In the world of investing, especially cryptocurrency, the situation is similar. Your assets can grow unevenly, creating risk. This is why rebalancing is very important.
Rebalancing is the art and science of rearranging the portions of assets in a portfolio to remain aligned with your original target or long-term goals.