BTC perp accounts turn heavily long as Binance long/short ratio surges to 3.87

Last week, the long/short account ratio for BTC on Binance climbed to 3.87, its highest level in more than three years.

This ratio is the proportion of net long and net short accounts to total accounts of the top 20% users with the highest margin balance, for BTC on Binance. A reading of greater than 1 means more of those large accounts are net long, while less than 1 means more are net short.

Each qualifying account counts the same, regardless of position size, so this metric is more of a sentiment gauge rather than a precise measure of notional exposure. To address a common misinterpretation, this specific metric in our dashboard is the share of top accounts that are net long vs net short on perps, as opposed to a ratio of the notional value of top perps positioning.

Just over a month ago, when BTC made an all-time high above $126,000, this ratio was sitting at multi-year lows below 0.6. That implies that among the biggest Binance BTC futures accounts, most were net short (or heavily hedged) into the highs, despite spot price euphoria.

In the 45 days since, BTC has dropped by over 35%, while the long/short ratio has surged to multi-year highs. This indicates the same cohort is strongly net long, with almost four long accounts for every short account. To put it simply, Binance whales were skewed short on BTC perps into strength and are now skewed long on perps into weakness.

However, it is worth noting that this metric is about perp account direction, not full-portfolio risk. A net-short perp stance at the highs could easily have been used to hedge spot BTC that was being sold or distributed over time, or even to run basis trades. Likewise, today's net-long perp bias might partly reflect hedging short options or other off-exchange exposures, as opposed to outright "bullish bets."

With this in mind, this indicator should instead be used to read how large, leveraged derivatives traders are leaning on perps in particular, while taking into consideration that said perps positioning does not necessarily reflect total net positioning.

This is an excerpt from The Block's Data & Insights newsletter. Dig into the numbers making up the industry's most thought-provoking trends.