Rebalancing - Spreadsheet Tool


#1

Thanks to @sethlouey and his post Rebalancing vs Buying in Top 10: $1,697,868.73 Profits!. Now, I want to give back as well!

To make rebalancing easy, I am sharing a spreadsheet tool I created, which has been working well for me the past few months. The spreadsheet makes it dead-simple to set your target crypto allocation percentages and perform an ongoing rebalancing strategy with little effort.

A one month rebalancing strategy will likely outperform a HODL strategy as shown in Seth’s backtest. But with the current volatility of the crypto market, I believe that an even more frequent rebalancing will achieve greater gains than a 1 month rebalance (i.e. weekly, or even daily, rebalancing would outperform a monthly rebalance, and definitely outperforms a simple HODL strategy). I don’t have backtesting data to prove the daily rebalance theory (would love it if someone could run this backtest), but I know from experience the spreadsheet has allowed me to take advantage of the daily swings without any emotion or thinking involved in my part. I simply log in to Gdax, Bittrex, Binance, etc, then buy and sell exactly the amount the spreadsheet tells me to.

One note: I usually only rebalance if the crypto asset is beyond a certain percentage away from the target. So for example, if the spreadsheet tells me to sell/buy $90 of Qtum, I usually hold off until the amount to buy sell is beyond, say, a $100 threshold (the small amounts aren’t worth the effort and potential extra fees).

Sheet 1 - Allows you to perform a custom rebalancing strategy on all or some of your crypto assets. This is the sheet I use, and it has the actual cryptos I own and target percentages I use just in case you were curious :slight_smile: - though it does not have my actual dollar/holding amounts (I just made up those values for the template). My suggestion is to limit your “large cap” to 5 cryptos, and your “small cap” to 10 cryptos. I also include my HODLs and DCAs here as well so I can see everything with this one dashboard.

Sheet 2 - I just now created this sheet for the Top 10 rebalancing strategy mentioned in the @
sethlouey thread above (if you want to do that strategy instead). All target percentages are set to 10% and the current holding amounts I input are close to $1000 (it will vary based on what day you open this). You could choose to rebalance quarterly, monthly, or as frequently as you want.

Feel free to make a copy, edit/add your own cryptos, and improve upon it!

To make a copy: Click on File --> Make a Copy

To the moon!!!:rocket::rocket::rocket:


Rebalancing vs Buying in Top 10: $1,043,902 Profits!
Rebalancing vs Buying in Top 10: $1,043,902 Profits!
Rebalancing vs Buying in Top 10: $1,043,902 Profits!
#2

again, thanks, but how is it possible to edit?


#4

just quick response - make a copy


#5

go to File > Make a copy. you can play with your own from then on


#6

Have you performed rebalancing with top 20 coins?
I was curious to know about what results can top 20 coins can give, with quaterly, monthly or weekly rebalancing.


#7

I haven’t performed rebalancing with top 20 coins (there are certain ones I like and don’t like, so don’t want them all in my portfolio). Mine are the ones listed in the template (%s are the same too, though balances are made up). I imagine top 20 would do quite well, though unsure if it would do better than top 10 rebalance (might be more work for diminishing returns).

One thing I’ve noticed: Cryptocurrencies are becoming more correlated with one another as more institutional investment enters the market. For example, the whole market is raising and falling in a more correlated fashion, which is the enemy of a rebalancing strategy.

So it is good to have a few inversely correlated cryptos in your portfolio. For example, I’ve noticed that OMG, QTUM (and to a lesser extend, NEO) go down when the rest of the market goes up (and vice versa). ICX (and other Asia coins) may do the same when it hits other exchanges. If you don’t have inversely correlated assets, you won’t get as large of a benefit. EDIT: Probably the biggest one… BTC and BCH as a hedge against each other (they are somewhat inversely correlated)… I’m ending up with more units of each as a result of holding large % of both!

That said, I originally had coins like Lunyr and TenX in the portfolio for their volatility and inverse correlation, but ended up moving them to my HODL coins. I want to keep them as long term plays, but I decided to put coins in my rebalance portfolio that I believe in more (i.e. I no longer put coins in just because they seem volatile).

Another note: ICX may make it’s way into my rebalancing strategy, but for now I’m going to DCA it with $100/week. I think it’s fast growth will outweigh any potential gains made from volatility (but who knows). I’m doing the same with PowerLedger and Raiden Network, which could explode this year.


#8

Amazing, thank you! jkfdlsajfdksal;


#9

Can you key it into the coinpuff.com site instead of coinmarketcap so it’s more accurate?


#10

I had thought about that, but I don’t think https://coinpuff.com has a public API yet for external data grabs (as far as I know).

Once it does, I’d much rather grab the price data from there! Bithumb exchange usually skews coinmarketcap data higher, which drives me nuts when I go to to rebalance and see the actual prices are much less.


#11

@peter let us know when you have a public API so @droopy can update this amazing tool please!


#12

What an excellent tool,it gives one guidance kind of like adding a rudder to our investment boats.


#13

That’s actually very useful but I still have a question: how do you decide what is the target? Is it completely arbitrary or there’s some hidden logic behind?
Thanks again, good job!


#14

It’s not an exact science, but whatever % you pick, the main thing is to stick with it! And by that, I mean don’t change the percentages based on news of the day (i.e. getting your emotion involved), or else this breaks down.

For me, I grouped the main 5 cryptos in the “large cap” bucket and maintain those at 75% of the entire portfolio. Any percentage split inside the 75% is probably fine (as these cryptos are all poised for growth), but overall, these 5 cryptos will steer the ship.

With the other 25% (“the small cap”), I chose some more risk-reward plays. If some these “alts” moon, then I’m essentially smashing the money back into the top 75% without you even knowing it’s happening (spreadsheet does the work).

Of course, the easy “no brainer” approach is use Sheet 2 instead, which is a 10% split over the top 10 coins. That method would be perfectly fine.


#15

I smashed literally EVERYTHING I had available into ICX at $2 and $5, and I’m HODLing that shit. So I’m going to have modify this strategy to coincide with my DCA. Maybe shove my paltry DCA every 2 weeks to one at a time until I have a little to work with, then begin rebalancing? Seriously thinking about selling my unique Harley to make some gains, then I can always buy a new one later. I love the idea of this technique, just can’t go whole hog right now, ICX is my ticket. Suggestions on my idea if DCAing to ease into it?


#16

Yes, HODL the ICX!
As for the DCA, you can start with one at a time, but pretty soon you will be “rebalancing” as you put money in, by putting money only into the one or two or three that are down, which brings them back up to the balanced levels. Next DCA time, the others may be down, so spreadsheet tells you to put in those. Your approach should work out just fine!


#17

I think it’ll be a good exercise in analyzing which projects are best at the time too!


#18

So if you are rebalancing daily or even weekly, I cannot imagine transferring the coins to and from a wallet. How do you manage this aspect of keeping them safe vs time commitment?


#19

I keep some amount of money on the exchanges for the purposes of rebalancing (and a lot of alt coins I just leave on the exchanges). The rest gets put on my ledger wallet. There have been cases where I’ve had to transfer money back from my ledger wallet to the exchange to rebalance (like when BCH and BTC were on wild swings), but that happens very infrequently.


#20

HI Droopy,

Thank you for your contribution too!


#21

Droopy,

You are a genius! thank you so much for this. I know this is asking a lot, but can I message you and bounce some ideas off of you about rebalancing strategy in 2018? :grimacing: