What is Open Interest?
Open Interest (OI) represents the total number of active futures or options contracts that are currently held by market participants. Each contract has a buyer and a seller, but they count as one unit of open interest.
How It Changes
| Action | Effect on OI |
|---|---|
| New buyer + New seller | OI increases |
| Existing holder closes + New trader opens | OI unchanged |
| Both sides close positions | OI decreases |
Why It Matters
Open interest helps gauge market participation and conviction:
- Rising OI + Rising price: Strong bullish trend, new money entering longs
- Rising OI + Falling price: Strong bearish trend, new money entering shorts
- Falling OI + Rising price: Short covering rally, potentially weak
- Falling OI + Falling price: Long liquidation, capitulation
OI vs Volume
| Metric | Measures |
|---|---|
| Volume | Total contracts traded in a period |
| Open Interest | Total contracts currently open |
High volume with rising OI = strong trend conviction High volume with falling OI = position unwinding
In Our Reports
We track Bitcoin open interest across major exchanges. Significant changes in OI often signal shifts in market structure and can precede large price moves.