How Rebalancing Works?
BIT10's backend constantly monitors the performance of the cryptocurrencies in the index fund. We'll focus on BIT10 TOP where we track the top 10 cryptos (excluding stablecoins) as an example.
If a crypto in BIT10 TOP falls out of the top 10 due to a drop in market cap, it is removed from the fund and a new cryptocurrency that was previously in position 11 will now come back to the top 10, replacing the crypto that was at position 10.
Rebalancing occurs daily at 11AM GMT. BIT10 uses market cap weighting as opposed to a simple average.
Users don't need to worry about monitoring the market or adjusting their portfolio manually. BIT10's automated rebalancing does this for them, providing a hands-off investment experience.
Automatic Rebalancing
Like the S&P 500, BIT10 TOP adapts:
- Assets that grow get added weight
- Assets that shrink lose weight
Daily Rebalancing Schedule
Snapshot: Current market caps recorded, new target weights calculated (e.g., BTC 69.91%, ETH 14.35%, etc.)
Adjustment: Compare current holdings to targets, calculate required trades, execute buys/sells to align weights
Hold: Portfolio matches market-cap weights. Repeat every day at 11AM GMT.
Real Example
NVIDIA wasn't in the S&P 500 in 2017. Today it's the largest company.
Kodak was a giant in the 1990s. It was removed in 2004.
The index adapts. BIT10 TOP adapts too.
Top 10 Changes
If a crypto falls out of the top 10 due to a drop in market cap:
- It's removed from the fund
- A new cryptocurrency (previously #11) takes its place
- Weights are adjusted automatically
You don't have to do anything. The index adapts.