Stablecoins enable dynamic portfolio rebalancing based on volatility metrics. When the Crypto Fear & Greed Index signals extreme fear (e.g., below 20), investors shift more assets to stablecoins; during greed (above 80), they reallocate to risk assets. This strategy uses stablecoins as a valve, adjusting exposure to match market sentiment. For example, during the 2024 Bitcoin volatility spike, a 50% stablecoin allocation mitigated drawdowns, with rebalancing triggered by the CBOE Bitcoin Volatility Index (BVOL).