Open interest

Every futures or options contract has a buyer and a seller. Open interest counts the contracts outstanding at a given moment, not the trades made. It rises when new positions are opened and falls when existing ones are closed, expire or are liquidated. Unlike trading volume, which resets each day, it measures how much exposure remains in the market.

Crypto data sites aggregate open interest across exchanges for bitcoin, ether and other assets, usually in dollars, and CME open interest is followed as a sign of institutional activity. Analysts compare it with price: rising open interest alongside a rising price suggests new money entering, while a sharp drop during a sell-off usually reflects liquidations.

Open interest says nothing about whether longs or shorts are winning, since both sides are always equal in size. When quoted in dollars it also grows simply because the price rises. Record levels mean more leverage in the system and a higher chance of violent moves.