Open interest is the total amount of derivative contracts outstanding in a market at a moment in time: every futures, perpetual or options position that has been opened and not yet closed, expired or settled. In crypto it is usually quoted in dollars or in units of the underlying coin.
How it changes
Every contract has a buyer and a seller, so open interest counts contracts, not participants on one side.
- When a new buyer and a new seller open a contract together, open interest rises.
- When an existing long and an existing short both close, it falls.
- When one trader hands an existing position to another, it is unchanged — the contract simply changed hands.
That is why open interest and trading volume answer different questions. Volume counts how much traded; open interest counts how much exposure remains on the books afterwards.
What it is used to describe
- Leverage in the system. Rising open interest means more positions — and usually more borrowed exposure — riding on price. A large build-up can make a market more prone to forced closures if price moves sharply.
- Participation behind a move. A price rise accompanied by rising open interest describes new positions being opened into the move; a rise with falling open interest describes shorts closing out.
- Unwinds. A sudden large drop in open interest alongside a sharp price move is the typical footprint of liquidations, where exchanges close under-margined positions automatically.
None of these patterns says which way price goes next. Open interest describes positioning, and positioning can be wrong in either direction.
Related terms
In crypto, a large share of open interest sits in perpetual futures, whose funding rate shows which side is paying to hold its position. Options open interest clusters around specific expiry dates, which is why large expiries are reported as market events.
In MoonWire analysis
Our market pulses and prognosis articles report open interest as reported by the exchanges and data desks our sources cite, described as positioning context rather than as a directional signal.