L'INFORMATEUR CRYPTOHome › Glossary › Open interest
Open interest: definition
Open interest is the total number of futures contracts still open on an asset. It measures how much leverage is in the market.
Definition
Open interest (OI) is the total value of open positions on a crypto's futures and perpetual contracts. Every contract has a buyer (long) and a seller (short): OI doesn't tell you who is winning, but how much money is committed with leverage.
How to read it
- Rising OI: new positions are opening, leverage is increasing. The current move is attracting fresh money.
- Falling OI: positions are closing or being liquidated, leverage is being flushed.
- Price up + OI sharply up: a leverage-fuelled rally, risk of a downside wick if longs get liquidated.
- Price down + OI down: longs are capitulating, the flush can set up a bottom.
Concrete example
Bitcoin gains 3% in a few hours and open interest jumps 8%. The move is mostly driven by leveraged traders. If funding turns very positive at the same time, longs are overcrowded: a quick drop to liquidate them becomes likely.
Pitfalls to avoid
- Thinking high OI is bullish: it only signals leverage, in either direction.
- Looking at OI in dollars without accounting for price: OI rising with price may simply reflect the higher value of the contracts.
Frequently asked questions
What's the difference between volume and open interest?
Volume counts all contracts traded over the period; open interest counts those that remain open. A trader who opens then closes a position adds volume but not open interest.
Is record open interest dangerous?
It signals a lot of leverage in the market: sharp moves become more likely, because liquidations cascade in one direction or the other.