KuCoin Help Center

[Smart Rebalance] Strategy Analysis

Smart Rebalance is a classic strategy that has been used for decades in the traditional industry. The core of the strategy is to increase the total amount of assets by selling high and buying low, at the same time maintaining the portfolio basically unchanged.

When the portfolio imbalance exceeds the ratio or when the rebalance day arrives, the rebalance will be triggered. By selling coins with a high ratio and buying coins with a low ratio, the coin ratio will be adjusted to the targeted one. 

In the short term, selling high and buying low will make some coins more, whereas others less, however, due to the market volatility, the total assets will increase. 


The Principle of Smart Rebalance 

To better understand the whole process of how Smart Rebalance works, we will take an example. 

Assuming now your Smart Rebalance consists of four crypto assets which are BTC, ETH, LTC and KCS. Among the portfolio, four coins are equally sharing 25% value. If now the total value of the portfolio is 1,000 USDT, thus the value for four coins is 250 USDT. 

Let’s take interval rebalance as an example. If the interval was set to 12 hours, within the following 12 hours, BTC has gone up, whereas ETH went down. When the rebalance timing of 12 hours arrives, rebalancing will be triggered which means the exceeding amount of BTC will be sold, to make the ratio of the portfolio to 25% again for four coins. 


The Advantages of Smart Rebalance

With the trend of HOLDING strategy among the crypto investors, Smart Rebalance has brought a new way to hold for those investors, potentially increasing the return on holding crypto assets by taking advantage of rapid price fluctuations. When the price of the coin goes up reaching the targeted threshold, the Smart Rebalance bot will execute and distribute the additional value to other assets in the portfolio. Even if the price of the specific coin returns back to the original value before it has been rebalanced, the net profit has been achieved and naturally, the total amount of the assets increased. 

Smart Rebalance right now offers 11 different types of portfolio which include 5 moderate asset class DCG Portfolio, A16Z Portfolio, AlamedaResearch(SBF) Portfolio, CEX and BSC; 2 aggressive asset class NFT and Privacy and 4 growth asset class Polkadot ecosystem, DEX, Defi and DAO. You could choose the portfolio based on your own risk appetite. 


Two Rebalancing Modes 

Smart Rebalance now provides two types of rebalancing modes which are Threshold Rebalancing (by coin ratio) and Periodic Rebalancing(by time). 

Threshold Rebalancing  


    (1)Initial ratio                               (2)3% threshold triggered                        (3)Ratio after rebalancing 


Assuming the targeted threshold coin ratio is 3%, as shown in pie chart 2, the position in green has gone up from 20% to 23% which just matches the targeted 3% deviation, thus rebalancing will be triggered and the ratio of the coins will be adjusted to the initial settings. 

Periodic Rebalancing 


    (1)Initial ratio                                   (2) Ratio within 24H                         (3) Ratio after Rebalancing

Assuming the interval for rebalancing is 24 hours, when the 24 hours reach, the bot will automatically adjust the ratio of the position to the initial settings. 

Now you’ve learned much about the Smart Rebalance bot, go start and try it now!