This page is for information purposes only. Certain services and features may not be available in your jurisdiction.

What is open interest in crypto?

*This article discusses products that are not available in all regions.

Open interest (OI) is a metric that shows the total number of outstanding derivatives contracts, such as futures or options, that remain unsettled. OI is used by traders to measure market activity and sentiment towards a specific asset. The metric achieves this by showing the total number of active contracts at a certain moment in time.

If you’re looking to trade crypto derivatives products in available markets, it’s worthwhile to understand what open interest is, how to calculate the metric, and how you can use open interest to inform your trading strategy. Read on as we explore these areas.

How to calculate OI

The formula for calculating OI is relatively simple. All we need to do is add the total number of open long positions to the number of open short positions. However, keep in mind that this total is always changing as buyers and sellers open and close positions.

Here's how the changing buy and sell positions impact the OI total, using the scenario of two traders entering into a contract.

Trade

Impact on OI

Two traders each open a new position

OI increases by 1

One trader closes their position, the other's remains unchanged

OI decreases by 1

A position is transferred to a third trader

OI stays the same

Benefits and limitations of OI

Before measuring OI as part of your trading strategy, it's wise to understand the benefits and limitations of the metric, as part of your wider research.

Benefits of open interest

  • Reduced trading costs: Higher OI typically indicates deeper liquidity, making it easy for traders to enter and exit positions. This increased trading activity results in more narrow bid-ask spreads that allow for reduced transaction costs and slippage for active traders.

  • Gives context to market sentiment: OI could be used to back up other evidence of a shift in trader sentiment, reinforcing any wider technical analysis you've completed.

  • Transparency to market activity: Because OI reveals the number of unsettled contracts for an asset, you gain valuable insight into market engagement, allowing you to make more informed, data-driven decisions.

  • Simplicity: Because you can quantify OI through a calculation, it's one of the simpler metrics you can use for technical analysis. As a result, OI can be adopted by beginner traders right through to veterans.

Limitations of open interest

  • It's a lagging indicator: As OI relies on past data to provide a measure of what's already happened, it can only confirm a trend after it's started. This could lead you to miss potential gains if you open a position after prices have already moved.

  • It can be misleading without additional context: By now we know that OI can be most effective when it's combined with other metrics. However, that means OI could be misleading if it’s viewed without context, potentially leading you to incorrect conclusions.

  • Lacks directional detail: OI shows the total number of unsettled contracts, but not whether they're bullish or bearish. Further analysis is needed to place OI in context and allow you to make a fully informed trading decision.

Using OI in your crypto trading strategy

Now that we've got a clearer picture of what OI is and its benefits and limitations, how can you apply the metric to your trading strategy? Here are three ways many traders use OI.

Understand market participation

Some traders measure OI alongside price action for insight into market participation. Rising OI and prices could suggest growing trading volume. On the other hand, falling OI could suggest that positions are being closed, pointing to weakening momentum.

Suggest possible trader sentiment

Because open interest sometimes shows a correlation to market volume, some use it to judge possible trader sentiment. Rising OI and prices could suggest positive sentiment, while the opposite scenario might suggest more fear in the market.

Help spot trends

Other traders use open interest to identify trends, and once again, volume is a key metric often included for this purpose. Rising OI coupled with rising volume could suggest a trend is strengthening, because increasing OI points to new money entering the market. The question then is: in what direction is the trend moving? Price action can help to answer this. Rising OI and volume during a period of downward prices could suggest a continuing bearish trend — and vice versa, when prices are rising.

The final word

Open Interest is a useful metric to understand when completing technical analysis in the sometimes complex derivatives market. Although OI is often most effective when measured alongside other factors, its simplicity and transparency mean the metric is accessible for beginner traders as they can quickly gauge existing liquidity in the market.

Interested in learning more about derivatives trading? Our essential guide is a good place to start, alongside our explainer article on trading BTC derivatives.

Disclaimer
This content is provided for informational purposes only and may cover products that are not available in your region. It is not intended to provide (i) investment advice or an investment recommendation; (ii) an offer or solicitation to buy, sell, or hold crypto/digital assets, or (iii) financial, accounting, legal, or tax advice. Crypto/digital asset holdings, including stablecoins, involve a high degree of risk and can fluctuate greatly. You should carefully consider whether trading or holding crypto/digital assets is suitable for you in light of your financial condition. Please consult your legal/tax/investment professional for questions about your specific circumstances. Information (including market data and statistical information, if any) appearing in this post is for general information purposes only. While all reasonable care has been taken in preparing this data and graphs, no responsibility or liability is accepted for any errors of fact or omission expressed herein.

© 2025 OKX. This article may be reproduced or distributed in its entirety, or excerpts of 100 words or less of this article may be used, provided such use is non-commercial. Any reproduction or distribution of the entire article must also prominently state: “This article is © 2025 OKX and is used with permission.” Permitted excerpts must cite to the name of the article and include attribution, for example “Article Name, [author name if applicable], © 2025 OKX.” Some content may be generated or assisted by artificial intelligence (AI) tools. No derivative works or other uses of this article are permitted.

Related articles

View more
Social engineering scams explained thumb
Security

What Is Social Engineering? A Guide to Today’s Most Common Scams

Social engineering scams are on the rise , fueled by widespread social media usage and advancements in tools including AI that allow deceptions to be more convincing. This type of scam relies on criminals exploiting human emotions, whether creating false trust or instilling fear, to encourage an action that allows a scam to happen.
Jun 16, 2025
Beginners
What to do in social engineering scam thumb
Security

Don’t Panic: What To Do in a Crypto Social Engineering Attack

In a separate article, we explore what social engineering is and some common crypto scams that use it to manipulate and defraud crypto users. Understanding what social engineering is raises another important consideration: what to do if you find yourself caught up in such a scam?
Jun 16, 2025
Beginners
Video Thumbnail Demo Trading
Trading tools
OKX
Ethereum

4 tips to level up your USDT with Shark Fin

OKX Shark Fin offers a great opportunity to earn USDT without putting your principal at risk. If you are new to Shark Fin, be sure to check out our beginner's guide here . Here are four tips to help you level up your earnings using Shark Fin.
Jun 16, 2025
Beginners
1,196
Copy trading thumbnail
OKX
Trading

Introducing OKX Copy Trading

OKX is excited to introduce Copy Trading, a new tool under OKX Social Trading that gives you a whole new trading experience. With OKX Copy Trading, you’ll be able to share your best trading strategies for a profit, or learn and copy trade with 600+ trading pairs from pro traders around the world.
Jun 13, 2025
1
golpe de investimento
Security

Safer crypto trading: how to spot scams

Scams have unfortunately emerged as a prominent and persistent challenge in the crypto space as bad actors lurk in the shadows. Backed by advanced technology and tools, these scams have become increasingly sophisticated and harder to identify.
Jun 9, 2025
Beginners
231
golpe de investimento
Security

Is your crypto side hustle a scam? Identifying part-time job crypto scams

How does a part-time job in the world of crypto sound to you? To many, it's an exciting opportunity to be involved in a technology that's positively disrupting industries. The crypto sector can be thrilling, especially for those passionate about new technology and digital assets who want to merge their interests with a career.
Jun 4, 2025
Beginners
74
View more