Since the market crash last week, short-term retail traders have been expecting a rebound, as reflected in derivatives data across major exchanges. However, this optimism is now facing challenges as the recovery appears weaker than many had hoped.
What risks could retail traders face if they continue to pursue long positions? Recent reports highlight several key points.
Retail Traders Increase Long Positions in October — But Will They Succeed?
According to the latest report from Hyblock Capital, retail investors are maintaining aggressive long positions across major cryptocurrencies. The long ratio currently ranges from 68% to 79% for Bitcoin (BTC), Ethereum (ETH), Solana (SOL), and HYPE.
SponsoredData from Coinglass supports this view. On Binance, the Long/Short Account Ratio is 2.1 for BTC, 2.6 for ETH, 3.7 for SOL, and 2.0 for HYPE.
A higher ratio means a larger number of long accounts compared to short ones. This suggests that many traders expect a V-shaped market recovery after the sharp decline on October 11.
However, the correlation between long ratios and prices now points to potential losses for retail traders. Data from Hyblock shows a strong negative correlation:
- BTC: -0.93
- ETH: -0.86
- SOL: -0.87
In other words, as long ratios rise, prices tend to fall — suggesting that retail longs may struggle as the market declines.
This pattern already appears to be unfolding. CoinGlass data shows that over $1.1 billion in positions were liquidated recently, with $873 million coming from long trades.
“In the past 24 hours, 289,922 traders were liquidated. The total liquidations come in at $1.11 billion,” Coinglass reported.
The total crypto market capitalization continues to correct, falling below $3.6 trillion. As a result, the scale of liquidations could rise further. This surge in forced liquidations indicates that retail optimism may fade quickly under continuous sell pressure.
Excessive liquidations can drain retail traders’ capital. Even if many altcoins drop to lower prices, they may no longer have the funds to buy back in. This could make a V-shaped recovery unlikely and keep the market volatile and range-bound at lower levels.
