The main point

  • Binance's new Rebalancing Bot allows users to automatically adjust their cryptocurrency portfolios to easily maintain their desired asset allocation.

  • Rebalancing is important for managing risk, trading in line with your investment goals, and potentially increasing returns by selling expensive assets and buying cheap ones.

  • Rebalancing Bots can be used to rebalance based on predetermined time intervals or changes in certain coin ratios.

Managing a diversified crypto portfolio can be challenging, especially for those new to the world of digital finance. One concern faced by investors in the fast-moving crypto space is the need for rebalancing from time to time. Rebalancing is the process of adjusting holdings in a portfolio to maintain a desired asset allocation. This means buying or selling specific assets to ensure that the portfolio maintains a specific mix of tokens based on the investor's risk tolerance and investment goals.

This is where Binance's new Rebalancing Bot comes into play. The tool provides a seamless way to automatically adjust a user's portfolio at fixed intervals or whenever the coin ratio deviates from a set value. In this blog, we will explore the benefits of using the Rebalancing Bot on Binance, how to access it, and how to rebalance your portfolio based on time intervals or token ratios.

Why Should You Rebalance?

The need for rebalancing arises when the cryptocurrency market experiences volatility and the relative value of certain cryptocurrencies in a portfolio changes. For example, a significantly increasing value of bitcoin could cause a portfolio to be overweight in BTC and underweight in other cryptocurrencies. In this case, portfolio rebalancing would involve selling some bitcoins and buying other cryptocurrencies to restore the desired allocation.

Rebalancing is important for several reasons. First, it helps manage risk by ensuring that the portfolio is diversified and not too concentrated in one cryptocurrency. Second, it helps maintain the initial investment strategy and goals. Third, there is the potential to increase returns by selling assets that are too expensive and buying assets that are still cheap.

Overall, cryptocurrency portfolio rebalancing is a necessary process to ensure that the portfolio is optimized for risk and return. Users who approach trading systematically should rebalance regularly and with careful consideration of market conditions and their investment objectives.

Bot Rebalancing Binance

Binance understands that many of our users want to stay up to date on developments in the fast-moving cryptocurrency market, but not everyone can trade actively using the many tools available across the Binance ecosystem. That's why we built Rebalancing Bot: to provide a way to rebalance a user's portfolio on a responsible and trusted platform with minimal effort.

To access the Binance Rebalancing Bot, you must create an account and log in. Once you're logged in, go to the strategy trading page, then select Rebalancing Bot.

The Rebalancing Bot will automatically adjust your holdings in your chosen token combination. By buying low and selling high, your strategy can maintain the same asset value ratio through rebalancing at preset intervals or thresholds. You can choose the auto rebalancing feature of this bot to be triggered by certain coin ratio changes or predefined time intervals.

Rebalancing based on coin ratio

When you select this option, the bot will only rebalance when the change in any asset ratio exceeds a preset threshold value – 0.5%, 1%, 2%, or 5%.

To illustrate, let's consider the following scenario:

  • Portfolio: BTC & BNB

  • Time: 1 minute (default)

  • Coin ratio: 1%

  • Amount invested: 800 USDT

  • Initial coin allocation: 50%

In other words, our hypothetical portfolio initially contains BTC worth 400 USDT and BNB worth 400 USDT. The system will automatically calculate the ratio of each token in the portfolio, which in this case is 50% for each asset.

For example, after some market movement, the value of BTC and BNB in ​​the portfolio becomes 450 USDT and 550 USDT respectively. The total portfolio value is now 1,000 USDT, then the coin ratio has changed to 45% BTC and 55% BNB. The ratio difference exceeds the preset level of 1%, so automatic rebalancing will be triggered.

To restore the initial allocation, the bot will rebalance the position by buying 5% BTC and selling 5% BNB:

Nilai BTC = 450 + (1,000 * 5%) = 500 USDT

Nilai BTC = 550 + (1,000 * 5%) = 500 USDT

After rebalancing, the portfolio will have BTC worth 500 USDT and BNB worth 500 USDT. The ratio is returned to 50%.

Balancing based on token ratios can be beneficial for users who want to ensure their portfolio is diversified and balanced. However, this can also result in missed opportunities if certain coins consistently perform better than others.

Rebalancing based on time

With this time-based approach, the system checks whether rebalancing is required at fixed time intervals. You can set the interval to 30 minutes, 1 hour, 4 hours, 8 hours, 12 hours, 1 day, 3 days, 7 days, 14 days, or 28 days.

Consider the following scenario:

  • Portfolio: BTC & BNB

  • Time: 7 days

  • Coin ratio: 0.5% (default)

  • Amount invested: 800 USDT

  • Initial coin allocation: 50%

Again, the hypothetical portfolio contains BTC worth 400 USDT and BNB worth 400 USDT. The bot is set to automatically calculate the ratio of each token in the portfolio every 7 days. If calculations show that the share of one of the assets has deviated from its original value by more than 0.5%, rebalancing will be triggered. From there, the rebalancing process is the same as explained previously.

The advantage of time-based rebalancing is that it can be used to adjust to the current level of volatility in the crypto market. When asset prices are relatively stable, portfolios can remain balanced with infrequent adjustments, whereas in turbulent times, shorter time frames are more useful for absorbing volatility. That way, a rebalancing period that is too long can result in a less diversified portfolio.

Rebalancing Bots vs Automated Investing

It's important to note that the Rebalancing Bot is different from Binance's Auto Invest feature. While Auto Invest allows users to make recurring investments by automating routine purchases of pre-defined assets, this feature is not designed to customize a user's portfolio. In contrast, the Rebalancing Bot allows investors to diversify their risk and automatically rebalance their holdings achieved through buying and selling assets as needed.

Rebalancing Bot Trading Fees

Rebalancing Bot users can enjoy a 25% discount on standard trading fees whenever they choose to pay fees with BNB.

First of all, you will pay standard trading fees from the Rebalancing Bot Wallet and receive a trading fee refund in your Spot Wallet. To check your BNB fee history, go to [Orders] - [Rebalancing Bot] - [Fee Refund History].

Please note that you must have sufficient BNB balance in your Spot Wallet to pay trading fees. Otherwise, you will not receive the 25% trading fee rebate. For more details, please see How to Use BNB to Pay Fees and Earn 25% Discounts.

Explore Strategic Trading on Binance

In addition to Rebalancing Bots and Automated Investing, Binance offers other automated trading strategies such as spot grid trading and futures grid trading. Our Grid Spot Trading Bot automates the placing of orders in the spot market at predetermined intervals within preconfigured price ranges. Grid Futures Trading Bot uses similar logic in the futures market. Both strategies seek to make profits from small changes in prices and are especially appropriate for volatile markets when prices fluctuate within a certain range.

Conclusion

Binance Rebalancing Bot offers an easy solution for users who want to manage their cryptocurrency portfolio with minimal effort. The tool allows automatic portfolio adjustments, both at predefined intervals and when the coin ratio deviates from a set value, making a diversified portfolio easier to maintain. Regular rebalancing can help increase returns as well as maintain the original investment strategy and goals ensuring the portfolio is optimized for risk and return.

Note that the Rebalancing Bot follows spot trading fee rates. Additional fees are not charged. For BNB fee deduction history, please visit Fee Refund History for more details.

Further Reading

  • (FAQ) Rebalancing Bot Explained and Frequently Asked Questions

  • (FAQ) Grid Spot Trading Explained and How It Works

  • (Blog) Step by step Guide to Grid Trading on Binance Futures

  • (Disclaimer) Strategic Trading Disclaimer


Risk warning: Binance does not determine the suitability of any portfolio or Bot Rebalancing parameters and makes no representation or guarantee that the Bot Rebalancing strategy will work as expected or will be profitable. Any risks associated with the Rebalancing Bot are borne by the user. Transactions made via the Rebalancing Bot may be subject to trading fees. You should consider the impact of trading costs on the performance of the relevant portfolio before deciding to use a Rebalancing Bot and set any relevant parameters. Binance will not be responsible for any losses experienced in connection with any Bot Rebalancing strategy.