What is open interest in crypto?

Open interest in crypto is the total number of futures or options contracts that are still open at a given moment. Every contract has a buyer and a seller, and open interest counts each contract once. It tells you how much money is committed to positions in a market, not how much is changing hands.

What is open interest in futures?

CME Group defines open interest as the total number of futures contracts held by traders at the end of the day. It moves only when positions are opened or closed:

• When a new buyer and a new seller open a contract between them, open interest rises by one.
• When both sides close existing positions, it falls by one.
• When one trader closes and hands the position to a newcomer, it stays the same.

CME's example shows how this works. If one trader buys one contract and another buys six, open interest is seven. If a trader then closes a position, it drops. The basics of futures and perpetual contracts are covered in what are crypto futures and leverage.

What is the difference between open interest and volume?

Volume counts every contract traded in a period, including positions opened and closed within minutes. Open interest is a running total of positions still outstanding. A day can have very high volume while open interest barely moves, if traders are mostly swapping existing positions.

In crypto, similar contracts on the same coin trade on many exchanges at once. TradingView, for example, combines open interest across many exchanges into one aggregated figure. It notes that single-exchange figures may be shown in coins, in dollars or in contracts, depending on the venue. That is why two websites can report different bitcoin open interest numbers on the same day.

How does open interest in options work?

The idea is the same. The Options Industry Council says open interest in options is the number of contracts still open, and is calculated by removing contracts that have been exercised or closed. It is often shown strike by strike, so traders can see where positions cluster ahead of expiry. Options themselves are explained in what are crypto options.

What does rising open interest mean?

Rising open interest means more money is being committed to positions. CME says analysts often treat rising open interest as confirming the strength of a trend, and falling open interest as a sign a trend may be losing steam. CME adds that it is most useful alongside other information, not on its own.

On its own, though, it does not say which side is winning, because every long has a matching short. High open interest also means more positions that could be forcibly closed if prices move sharply, which is one way liquidations can cascade.

For CME's regulated bitcoin futures, the US Commodity Futures Trading Commission publishes a weekly Commitments of Traders report. It comes out on Fridays and shows open interest as of the previous Tuesday, broken down by trader type.