Definition
Open interest is a metric that measures the total number of active derivative contracts, such as futures and perpetual futures, that have been opened but not yet closed, expired, or settled. It reflects how many long and short positions are currently outstanding in a given market, without netting them against each other. Open interest changes when new contracts are created or existing contracts are fully closed, but not when positions are simply transferred between traders.
In crypto markets, open interest is commonly tracked for futures and perpetual futures across centralized and decentralized venues. It is often expressed in terms of contract count or notional value, typically denominated in the underlying asset or a stablecoin. While it does not indicate direction by itself, open interest provides a snapshot of how much leveraged exposure is currently committed to a market.
Context and Usage
Open interest is closely watched alongside price, volume, funding rate, and liquidation data to understand the structure of derivatives markets. High open interest in futures or perpetual futures can signal that a large amount of capital is deployed with leverage, increasing the potential impact of sudden price moves. Changes in open interest can indicate whether new money is entering or leaving the derivatives market, independent of short-term price fluctuations.
In leveraged environments, elevated open interest can coincide with clusters of potential liquidation levels, making the market more sensitive to sharp moves. Funding rate dynamics in perpetual futures markets can interact with open interest, as persistent positive or negative funding may encourage one side of the market to build or reduce positions. As a concept, open interest does not prescribe trading decisions but serves as a structural indicator of how heavily a derivatives market is currently engaged.