Does a record-high open interest mean money is flowing in?
Here’s how I understand it: rising open interest only means there are more positions in the contracts. It doesn’t tell you whether bulls or bears have the upper hand, since every new position has both a long and a short side.
If both parties in a trade are opening new positions, open interest increases; if both are closing positions, it decreases; if one is opening and the other is closing, it stays unchanged.
What I do: It’s best to look at open interest alongside price and funding rates. Trying to guess the direction from changes in open interest alone can easily lead you astray.
Coin mentioned above: $BTC is at 76186, down 5.19% over 24h.
Here’s how I understand it: rising open interest only means there are more positions in the contracts. It doesn’t tell you whether bulls or bears have the upper hand, since every new position has both a long and a short side.
If both parties in a trade are opening new positions, open interest increases; if both are closing positions, it decreases; if one is opening and the other is closing, it stays unchanged.
What I do: It’s best to look at open interest alongside price and funding rates. Trying to guess the direction from changes in open interest alone can easily lead you astray.
Coin mentioned above: $BTC is at 76186, down 5.19% over 24h.
