Rebalancing is often perceived as a growth mechanism, but in a weak market, its main function is stabilization. It redistributes capital in a way that reduces distortions and maintains structure rather than accelerating upward movement.
When the market is under pressure, any incoming effort meets counter resistance. Growth that could form is extinguished by the overall decline in prices. As a result, the rebalancing effect becomes imperceptible, although the system itself continues to operate.
It is important to understand that the energy of the strategy at this moment is directed toward alignment. Capital does not accumulate momentum but is redistributed to prevent the destruction of the position. This is akin to maintaining balance on a slippery surface: there is movement, but it is not forward; it is aimed at preserving stability.
Because of this, there is a sense of futility in actions. It seems that efforts yield no results. But in reality, the result is expressed in the fact that the decline occurs more slowly and in a more controlled manner than it could have been without the system.
Output:
Rebalancing in a weak market acts as a stabilizer. It does not create growth but maintains the structure on which growth can be possible later.
⚙️ #Ребаланс