Long Short Ratio

Definition ∞ The long short ratio is a metric that compares the number of long positions to short positions held by traders on a given exchange or asset. A high ratio indicates a dominance of bullish sentiment, with more traders betting on price increases. Conversely, a low ratio suggests a bearish bias, with more traders anticipating price declines. This ratio provides insight into the collective sentiment and positioning of leveraged traders.
Context ∞ Analysts and crypto news sources frequently cite the long short ratio to gauge market sentiment and predict potential price movements, particularly in derivatives markets. Extreme imbalances in this ratio can sometimes precede sharp reversals as crowded positions become vulnerable to liquidations. Monitoring this ratio offers a view into the prevailing speculative outlook among active traders.