BTC Long/Short Ratio Insights

On Friday, Sept. 27, the BTC long/short ratio on Binance reached 0.73. This metric shows the proportion of net long and net short accounts relative to the total accounts of the top 20% of users with the highest margin balance for BTC on Binance over time.

The lowest recent level for this metric was 0.59 on Wednesday, Feb. 13.

Notably, since BTC’s all-time high of $73,650 on March 13, whenever this ratio approaches 0.9, it often coincides with local highs in BTC’s price. For instance:

• On March 11, the ratio was 0.9, and BTC’s price fell by around 6% over the next week.
• On April 8, the ratio hit 0.99, and BTC dropped roughly 11% in the following seven days.
• On May 5, the ratio reached 1.14, down from 3.39 just four days prior, leading to a 5% decline in BTC over the week.
• A 0.97 ratio on June 6 was followed by another 5% drop in BTC.

Most notably, a five-month low ratio of 0.79 resulted in an 18% crash in BTC over the next week. Recently, on Aug. 24, the ratio fell below 1 (at 0.96), and BTC faced an 11% decline shortly after.

While the data might seem repetitive, it underscores a pattern: whenever Binance’s BTC long/short ratio falls near or below 1, BTC frequently sees a notable drop soon after. Interestingly, the ratio is less reliable for predicting price bottoms; in the last five instances where it climbed above 3.0, only two corresponded with local BTC price bottoms.

While correlation doesn’t equal causation, it remains a trend worth monitoring.

This is an excerpt from The Block’s Data & Insights newsletter, exploring significant industry trends.