One of the most widely circulated quotes about order-following goes like this: when the large holders’ long/short ratio is 65% going long, “smart money” is in—follow it. In today’s piece, we’re breaking down exactly this sentence.
From last night to today, BTC large holders’ long/short ratio is 1.89—those 65% of positions are long; retail accounts’ long/short ratio is 1.2, and 55% of those accounts are also long. By the logic of “following the big boys,” you should just close your eyes and chase longs. But price has been stuck around the 84,000 level all day and hasn’t risen.
Because most people only look at one number and miss the other: the ratio of passive to active buy/sell volume—specifically, active buy/sell volume. In the last three hours, this figure has been 1.00, 0.91, 0.87, declining all the way—active sell pressure has been strengthening hour by hour. On one side, there are 65% long positions sitting there as inventory; on the other, there are continuously dominant active sell orders. Only when you put these two things together do you get the full picture.
Let’s translate it plainly: the long/short ratio reflects inventory—where the people who are already “on the train” are seated. Active executions reflect flow—where the people who are currently getting on or off are heading. The garage is full of long positions; that doesn’t mean the train is moving upward. What does it mean when 65% long inventory is paired with sell-flow? It means the people holding longs at higher levels are reducing positions, not adding. In market language, that’s “distribution,” not “building a position.” And anyone who rushes in just by following the long/short ratio is taking the very lots that these “smart money” holders are actively selling.
There’s another layer: the long/short ratio is essentially a congestion indicator, not a direction indicator. A retail long/short ratio of 1.2 is already considered crowded. When crowding reaches extremes, it often turns into a contrarian reference—everyone stands on the same side, so price often goes nowhere, or moves briefly in the opposite direction, because there’s no new fuel left. The funding rate is currently -0.0016%. Almost nobody is paying, which also confirms that neither side is truly “too hot”; it’s just stuck.
The right approach is two steps: first, use flow to set the direction—whether active成交（executions） are buys or sells determines the short-term driving force; then use inventory to gauge congestion—once the flow reverses, the people who are on the crowded side will use the next wave’s行情 as the fuel for their stop-loss. Only by using both data points together do you have the right to talk about “following the main force.” If you only look at the position ratio to board, that isn’t “following trades”—it’s “catching the bag.”
Engagement: Are you still watching the long/short ratio to follow trades? Vote in the comments: A. follow B. use it inversely C. don’t look at it at all. Have you paid tuition for this indicator? Tell me in the comments.
Follow me—every night at 21:00 live stream + SMC teaching.
#BTC #合约交易 #data interpretation
🌿 Zhao surname, not advice
From last night to today, BTC large holders’ long/short ratio is 1.89—those 65% of positions are long; retail accounts’ long/short ratio is 1.2, and 55% of those accounts are also long. By the logic of “following the big boys,” you should just close your eyes and chase longs. But price has been stuck around the 84,000 level all day and hasn’t risen.
Because most people only look at one number and miss the other: the ratio of passive to active buy/sell volume—specifically, active buy/sell volume. In the last three hours, this figure has been 1.00, 0.91, 0.87, declining all the way—active sell pressure has been strengthening hour by hour. On one side, there are 65% long positions sitting there as inventory; on the other, there are continuously dominant active sell orders. Only when you put these two things together do you get the full picture.
Let’s translate it plainly: the long/short ratio reflects inventory—where the people who are already “on the train” are seated. Active executions reflect flow—where the people who are currently getting on or off are heading. The garage is full of long positions; that doesn’t mean the train is moving upward. What does it mean when 65% long inventory is paired with sell-flow? It means the people holding longs at higher levels are reducing positions, not adding. In market language, that’s “distribution,” not “building a position.” And anyone who rushes in just by following the long/short ratio is taking the very lots that these “smart money” holders are actively selling.
There’s another layer: the long/short ratio is essentially a congestion indicator, not a direction indicator. A retail long/short ratio of 1.2 is already considered crowded. When crowding reaches extremes, it often turns into a contrarian reference—everyone stands on the same side, so price often goes nowhere, or moves briefly in the opposite direction, because there’s no new fuel left. The funding rate is currently -0.0016%. Almost nobody is paying, which also confirms that neither side is truly “too hot”; it’s just stuck.
The right approach is two steps: first, use flow to set the direction—whether active成交（executions） are buys or sells determines the short-term driving force; then use inventory to gauge congestion—once the flow reverses, the people who are on the crowded side will use the next wave’s行情 as the fuel for their stop-loss. Only by using both data points together do you have the right to talk about “following the main force.” If you only look at the position ratio to board, that isn’t “following trades”—it’s “catching the bag.”
Engagement: Are you still watching the long/short ratio to follow trades? Vote in the comments: A. follow B. use it inversely C. don’t look at it at all. Have you paid tuition for this indicator? Tell me in the comments.
Follow me—every night at 21:00 live stream + SMC teaching.
#BTC #合约交易 #data interpretation
🌿 Zhao surname, not advice