Three up weeks drift a fixed crypto sleeve towards an ETH overweight
Should the allocator rebalance the crypto sleeve back to its target ETH weight at this week's close, or leave it untouched while ETH underperforms BTC by 8.3 percentage points?
The market facts are real; the decision maker is illustrative.
The week and the position
In the week of 25 January 2021, ETH fell 5.72% (1,392.19 to 1,312.55) after prior weekly returns of +42.79%, +28.20%, -1.74% and +12.98%. It ranged 22.20% (high 1,475.00 Monday, low 1,207.00 Wednesday), realised 124.80% annualised volatility, fell 9.33% on Wednesday and rebounded 7.33% on Thursday, with volume 1.95 times its prior 12-week average. ETH lost 8.3 percentage points versus BTC; 8-hour funding averaged 0.0659%. An illustrative allocator holds a fixed crypto sleeve inside a larger fund.
Judgment
A fixed sleeve in a fund is not a directional bet; it is a weight that drifts. Three strongly up weeks would have pushed ETH above its target weight before this week's decline, so a rebalance back to target at the weekly close trims the drift rather than reacting to it. Close at 1,312.55 sits in the middle third of the range, which makes the close usable as a rebalance point. Do not add on Thursday's 7.33% rebound, and keep the sleeve's total size unchanged. Accept that 22.20% weekly ranges and 124.80% realised volatility remain the sleeve's normal.
What would change it
If the fund's own drift calculation shows the sleeve already sits within its rebalancing band at target, no trade is warranted this week. If ETH closes a later week back above the 1,392.19 open, the trim reverses that weight loss on its own.
What sets this case apart
The decision is about weight drift inside a fixed sleeve, not about forecasting ETH's direction or reacting to a single down week.