nirholas Portfolio Rebalancing
When to use this skill
Use when the user asks about:
- Rebalancing their crypto portfolio
- Whether their current allocations are too concentrated
- Setting up a target allocation strategy
- Calculating what trades to make to reach target weights
- Deciding how often to rebalance
Rebalancing Framework
1. Current Portfolio Assessment
Gather and analyze:
- Holdings list: Each asset, quantity, and current USD value
- Current weights: Each holding as a percentage of total portfolio
- Total portfolio value: Sum of all positions
- Performance since last rebalance: Per-asset and total
- Concentration check: Any single asset > 30% of portfolio is a concentration risk flag
2. Target Allocation Design
Help define or review target weights based on risk profile:
Conservative (lower volatility):
- BTC: 40-50%, ETH: 25-30%, Stablecoins: 15-20%, Alts: 5-10%
Balanced (moderate risk):
- BTC: 30-40%, ETH: 20-25%, Large-cap alts: 15-20%, Mid-cap: 10-15%, Stablecoins: 5-10%
Aggressive (higher risk, higher potential):
- BTC: 20-25%, ETH: 15-20%, Large-cap alts: 20-25%, Mid/Small-cap: 20-30%, Stablecoins: 5%
Key constraints:
- No single alt should exceed 10% of portfolio
- Stablecoin allocation provides dry powder for opportunities
- DeFi positions (LP, staking) count toward the underlying asset allocation
3. Drift Analysis
Calculate how far each position has drifted from target:
| Asset | Target % | Current % | Drift | Action |
|---|---|---|---|---|
| BTC | 35% | 42% | +7% | Trim |
| ETH | 25% | 20% | -5% | Add |
| SOL | 10% | 15% | +5% | Trim |
| Stables | 10% | 3% | -7% | Add |
4. Rebalancing Triggers
Recommend a rebalancing approach:
- Calendar-based: Rebalance monthly or quarterly on fixed dates
- Threshold-based: Rebalance when any position drifts >5% from target (recommended)
- Hybrid: Check monthly, only act if drift exceeds threshold
- Avoid daily rebalancing — transaction costs and taxes erode returns
5. Trade Calculation
For each rebalancing trade:
- Direction: Buy or sell
- Amount: Dollar value to trade (target weight * portfolio — current value)
- Priority: Execute the largest drifts first
- Cost awareness: Factor in exchange fees, gas costs, and slippage
- Minimum trade size: Skip trades smaller than $50 — not worth the gas/fees
6. Tax and Cost Considerations
- Tax lots: When selling, consider which lots have the lowest tax impact (long-term vs short-term gains)
- Tax-loss harvesting: If any position is at a loss, selling and rebuying (or buying a correlated asset) captures the loss for tax offset
- Gas optimization: Batch trades during low-gas periods; consider L2s if available
- Net rebalance: Match buys and sells to minimize total transaction count
7. Output Format
- Portfolio value: Total current value
- Largest drift: Which asset and how far from target
- Rebalance needed: Yes / No (based on threshold)
- Recommended trades: Ordered list with asset, direction, amount
- Estimated costs: Total fees and gas for the rebalance
- Post-rebalance allocation: Projected weights after trades
- Next review date: When to check again