Open Interest
The total volume of open positions in perpetual futures. A measure of leverage in the market.
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What the metric shows
Open Interest is how much money is currently standing in futures positions. Rising OI alongside price means an influx of new money and a healthy trend. Rising OI during sideways price action means accumulation of leverage, which will sooner or later discharge in a cascade of liquidations.
Sharp drops in OI by several percent in an hour constitute a liquidation cascade: positions were forcefully closed.
How it is calculated
OI = Σ notional value of all open contracts
How to read the signal
| Zone | Value | Interpretation |
|---|---|---|
| OI at maximums during a sideways trend | Accumulated leverage — risk of a cascade | |
| OI is rising along with the price | Healthy trend on new money | |
| OI sharply dropped | Leverage flushed, market cleared |
Frequently Asked Questions
Why in dollars and not in BTC?
Dollar OI is better for comparing between periods: in BTC, the chart is distorted by the price itself.