What is the difference between Bitcoin Longs and Bitcoin shorts?

Total Bitcoin longs (green line) Total Bitcoin short (red line) Both longs and shorts are measured in BTC. On shorter timeframes (say below one week) longs and shorts are typically almost straight lines because they don't fluctuate much and because of Y-axis scaling.

What is bitcoin shorting?

First, let me explain what Bitcoin shorting means. Shorting in crypto trading is usually called the sale of an asset, for example, BTC, with the aim of buying it at a lower price later. That is, a trader who shorts bitcoins assumes that the price of an asset in the spot market will fall and opens a corresponding position in advance.

Why do people look at bitcoin accounts long/short ratio?

For example, when the long/short ratio becomes excessively high, with an overwhelming number of long positions, there may be a risk of a price drop due to a reverse harvest. Therefore, many people look at the Bitcoin accounts long/short ratio to gauge the sentiment of larger market participants.

Is there a limit on Bitcoin shorts?

Still, there are no strict limits. As for bitcoin shorts, the potential price drop is capped at zero. That is why the position is called “short”, it is always limited in time. Such positions should only be opened in case of a pronounced bearish trend.