Sourced crypto guides
What Is Open Interest (OI)?
Open interest is the total number of unclosed contracts in futures and options markets. It is read with price: rising price + rising OI suggests new money entering, while rising price + falling OI suggests a close-driven move.
How to read open interest with price
OI shows whether new money is entering the market. If OI rises while price rises, the move may be supported by new longs; if OI falls, the move likely comes from short covering and its continuity is weaker.
The four basic combinations
Price↑ + OI↑ = strong trend (new longs). Price↑ + OI↓ = possible short squeeze. Price↓ + OI↑ = new short build-up. Price↓ + OI↓ = long unwinding. This table produces no orders by itself; it requires direction and context confirmation.
- Read OI change together with price direction.
- Sharp drops after OI peaks can mark unwinding.
- Compare data for the same exchange and pair.
The OI–liquidation relationship
In high-OI periods more leveraged positions are carried in the market; liquidation tiers grow during sudden moves. OI is therefore also used as an early gauge of volatility potential.
- High OI + extreme funding = fragile structure.
- Falling OI can show positions closing and risk declining.
- Read it together with funding and the long/short ratio.
Checklist
- Is the OI change consistent with the price move?
- Is it measured on the same exchange-pair?
- Were funding and long/short ratio also checked?
- Is OI not being used as a standalone decision input?
Frequently asked questions
No; OI shows total positioning, not direction. Direction must be interpreted together with price.
No. Volume measures the amount changing hands in a period; OI measures contracts still open.