🪣 Open Interest vs. Volume — What’s the Difference?
As we covered yesterday, volume shows how many trades were executed over a selected period. If the same coin is bought and sold ten times in a row, volume increases by ten.
Open Interest (OI) shows how many futures contracts are still open.
🟡 Opened a new long-short pair → OI adds 1.
🟡 Closed a position or it expired → OI subtracts 1.
🟡 Traded an existing contract from one trader to another? Volume rises, but OI stays the same.
Remember:
🟡 Volume = the hustle and bustle right now.
🟡 OI = how much money is still on the table.
How to Read the “Price + OI” Combo
Price up, OI up = Fresh capital enters — new positions open instead of just closing old ones. This new money usually fuels the trend and helps it keep running.
Price spikes up, OI down = Classic short squeeze: short positions close in a hurry, OI shrinks, and the burst can fade fast. Without new contracts, the move often loses steam after the first wave of liquidations.
Price flat, OI up = Someone is quietly building a big position while the market ranges. Energy is being stored; once a trigger appears (news, earnings, level break), price usually erupts — the fuel is already loaded.
Price down, OI up = New shorts are piling in. Selling pressure builds because more traders are betting on further downside. If buyers don’t show up, the drop can accelerate.
Price down, OI down = Both longs and shorts exit — everyone’s folding their hands. This often happens during panic or final profit-taking. Falling OI along with price can signal a local bottom or a shift to sideways action.
Quick Example
🟡 BTC is hovering around $101,299
🟡 OI has climbed by a billion dollars in a day, while volume is average.
🟡 The bets are placed, but price hasn’t moved yet—the spring is coiled.
🟡 Once you see a volume spike in either direction, expect a strong move: many contracts, little liquidity.
You can check OI here and here.
Keep an eye on both indicators: volume shows the fire, OI tells you how much fuel is left 🔥