Long/Short Ratio continuous time series from April 18 to May 18, 2025
The chart shows the ratio between the total long and short positions open (open interest) of BTC on the Binance exchange. I explain the parameters below:
Ratio ~ 1.0 Neutral zone (long ~ short)
Ratio > 1.2 Easy long squeeze zone (too many people going long)
Ratio < 0.5 Easy short squeeze zone (too many people going short)
👉GREEN ZONE LONG RATIO
Occurs: April 18-21, May 3-7, May 9-18
The ratio fluctuates around 0.5-1.2
I see this period as a time when the market is quite neutral, not leaning heavily towards long or short. Those with capital split into two sides to place orders, each side waiting for the trend. Therefore, if the exchange slightly pushes the price, it can wipe out both sides, especially those using high leverage.
👉RED ZONE SHORT RATIO
Occurs: April 21-May 2 and May 7-9
The ratio is within the range of 1.2 - 0.5
This is when I notice that most people switch to short, thinking that BTC will continue to decrease. But in reality, the price does not drop deeply, instead, it slightly recovers steadily each day, causing short traders to hold their positions until they get liquidated. This period is prone to short squeeze because everyone is shorting while BTC refuses to drop.
I see the green zone as a time of struggle between long and short, the market is unclear so it can be easily swept by the exchange. The red zone is when many people bet on excessive declines, and the result is they are forced to buy back when BTC just needs to recover slightly, leading to all short positions being wiped out.
I wonder how much you all have lost during this period
