How to read a crypto open interest chart
Open interest charts show open derivative contracts on a pair. Check the timeframe and axes, then compare the line with price, funding and liquidations.
Vahe HakobyanEditor-in-chief
Updated Oct 6, 20264 min readFact-checked
On this page
The chart tracks that count over time for one pair. You can find it on a crypto exchange's derivatives page or on a data aggregator that collects figures from several venues. CME has published open interest for its bitcoin futures since they launched in December 2017.
What you need before you start
Open interest counts derivative contracts that are still open on a pair. It is not trading volume, and it is not the number of traders, because one trader can hold many contracts. You can find the figure for a specific pair on an exchange's derivatives page or on an aggregator that gathers several exchanges.
- The pair and the contract type
- A timeframe that matches your price chart
- Whether the axis shows contracts or dollars
- A second venue for comparison
How to read the chart step by step
Start with the timeframe and the axes, because the same line can look different on an hourly and a daily view. The horizontal axis is time, and the vertical axis counts contracts or dollars, so check the label. Then read the line beside price, funding and liquidations.
- 1Set the timeframeMatch it to the price chart you are using, then follow the line from left to right.
- 2Read both axesThe horizontal axis is time, and the vertical axis shows the contract count or dollar value, so check which one your chart uses.
- 3Compare with priceWhen price and open interest rise together, positions are usually building. When both fall, positions are usually closing.
- 4Check the other combinationsIf price rises while open interest falls, positions are usually closing or shorts are covering. If price falls while open interest rises, new short positions are usually opening.
- 5Check the funding rateFunding is a periodic payment between long and short traders on perpetual futures. It can confirm which side is crowded, but it can also distort the reading when it is extreme.
- 6Watch for liquidationsA burst of forced closures makes volume jump and can put a sharp move in open interest. Those forced trades usually close positions, so do not read them as fresh positioning.
What to do after you read
One exchange sees only its own traders, and contract terms differ from venue to venue, so a single line is not the whole market. Compare the same pair on two other venues and check whether their lines moved together. For example, CME reports open interest for its bitcoin futures, which launched in December 2017, while offshore exchanges report their own perpetual contracts.
Frequently asked questions
Volume counts contracts traded during a period. Open interest counts only contracts still open at the end of that period.
No. It shows how many contracts are open and whether that count is changing, not which side will be right.
Each venue has its own traders and its own contract terms, so the figure covers a different set of positions.
No. A spot trade settles right away, so nothing stays open. Open interest belongs to derivatives such as futures, perpetuals and options.
