Bitcoin Open Interest

Bitcoin open interest is the total number of Bitcoin futures or options contracts outstanding in the market.
It is a measure of the amount of money invested in Bitcoin derivatives at any given time.

In Bitcoin futures and options contracts, traders speculate on the price of Bitcoin without having to own the asset.
When traders enter into Bitcoin futures or options contracts, open interest increases. As contracts close or expire, open interest decreases.

Each contract has a seller and a buyer so there are no more buyers than sellers or vice versa.

Bitcoin open interest offers insight into market sentiment.
Rising open interest may indicate growing bullish sentiment among traders, while falling open interest may indicate growing bearish sentiment.

In the futures market, each contract involves an agreement between two parties: one who is betting that the price of bitcoin will rise (long position) and another who is betting that the price will fall (short position).

When a futures contract is opened, a long position and a short position are created, thus increasing open interest.
This number increases with each new contract opened and decreases when contracts are closed.
Therefore, open interest is a measure of the amount of money or the number of positions that are "betting" in the market on the future movement of Bitcoin prices, whether up or down.

It is a bet on the direction of the BTC price. Investors and traders can use futures contracts to:

  • Speculation

    They try to profit from changes in the price of Bitcoin. If they believe the price will rise, they can take a long position. If they think the price will go down, they would take a short position.

  • Hedging

    Bitcoin miners and companies that rely on the price of Bitcoin for their trading can use futures contracts to lock in a future price, protecting against price volatility.