Crypto glossary
Long/short ratio
The long/short ratio compares how many accounts or positions are betting on a price rise versus a fall on a derivatives exchange, as a sentiment gauge.
Exchanges and data aggregators publish several versions. The account ratio divides the number of accounts holding net long positions by those holding net short positions. The position ratio weights by size, and some venues publish a separate ratio for their top traders. A reading of 2 means twice as many accounts, or twice as much size, is long as short.
Because every futures contract has a buyer and a seller, the ratio does not measure total long versus short exposure in the market, which is always equal. It shows how positioning is distributed among a particular group of users. Traders read extreme ratios as crowding: when most retail accounts are long, a drop can trigger a cascade of long liquidations, and vice versa.
The ratio is often used in a contrarian way, but crowded positions can persist for a long time. It varies a lot between exchanges with different user bases and is best read together with funding rates and open interest.
Example
On a large exchange, 74% of accounts trading SOL perpetuals are net long. When a negative headline hits, the price drops 9% as long liquidations pile up, and the ratio falls back toward 55%.