I’ve been asked this several times, so here’s one answer for everyone.
If both sides of a trade are opening new positions, open interest rises. If both are closing positions, it falls. If one side is opening while the other is closing, it stays the same.
The higher the open interest, the more positions may be liquidated or stopped out during sharp market moves. That’s why open interest is often used as an indicator of how crowded a contract is.
Back to the market: $BTC is currently at 83588.01, up 0.63% over 24 hours.
If anything wasn’t clear, ask me in the comments.
If both sides of a trade are opening new positions, open interest rises. If both are closing positions, it falls. If one side is opening while the other is closing, it stays the same.
The higher the open interest, the more positions may be liquidated or stopped out during sharp market moves. That’s why open interest is often used as an indicator of how crowded a contract is.
Back to the market: $BTC is currently at 83588.01, up 0.63% over 24 hours.
If anything wasn’t clear, ask me in the comments.