What is open interest?
- Author
- CRYPTO PORT Editorial
- Published
- Updated
- Reading time
- 4 min
In short
Open interest counts the derivative contracts that remain open. Unlike volume, it rises when new positions are created and falls when they are closed. It measures how much exposure is still outstanding — not the direction the price will take.
Key points
- Counts contracts that remain unsettled
- Rises on new positions, falls on closes
- Measures something different from volume
- Says nothing about price direction
Definition
The total quantity of futures or perpetual contracts still outstanding. Since every long is matched by a short, it is normally reported as one side of those pairs.
The bookkeeping is simple. When a buyer and a seller both open new positions, open interest rises; when both close, it falls. If one opens while the other closes, the position merely changes hands and the total is unchanged. Trading the same contract repeatedly does not reduce it.
That is precisely how it differs from volume. Volume counts trades executed over a period, so churning the same position inflates it. Open interest counts what is still outstanding, so it can sit flat even in a very active market.
All the number tells you is the scale of exposure still on the books. There is no rule that rising open interest means rising prices, or the reverse. Reporting is also per-venue, and cross-exchange totals differ by methodology. It is not an indicator that guarantees anything about future prices.
Watch out for
- · Changes in open interest do not reveal where prices are going
- · Figures are compiled per venue, and aggregates differ by methodology
- · Large outstanding exposure can amplify the impact of chained liquidations