Derivatives 3 / 6
Derivatives · Level 3Lesson 3 of 5

Open interest explained: new positions, or old ones closing?

Price tells you where the market went. Open interest tells you whether it got there with new positions being opened or old ones being closed — two very different moves.

You will learn
  • What open interest counts, and what it cannot tell you
  • The four ways price and open interest move together
  • Why "new longs" is a reading, not a fact

Before you start: The lessons on perpetual futures and on funding.

What open interest counts

Open interest is the number of contracts open right now. Each contract has a long side and a short side, so open interest is never "more longs than shorts": it is the size of the market, both sides at once. At 13:00 UTC on 2 October 2026, just after the day's high, open interest in Binance's BTC perpetual was about 99,800 BTC.

It rises when a trade opens a new contract — a new long and a new short at the same time. It falls when a trade closes one, with both sides leaving. When a new trader simply takes over an existing position from someone leaving, it does not change at all.

Four combinations

Read open interest together with price over the same hours:

  • Price up, open interest up — new positions, buyers in a hurry: new longs.
  • Price up, open interest down — positions closing while price rises: shorts buying back.
  • Price down, open interest up — new positions, sellers in a hurry: new shorts.
  • Price down, open interest down — positions closing while price falls: longs selling out.

Open interest — four real 4-hour windows of Binance's BTC perpetual. New longs, 2 October 01:00–05:00 UTC: price +2.20%, open interest +3.60%. Longs closing, 2 October 14:00–18:00: price −2.06%, open interest −4.45%. New shorts, 2 October 17:00–21:00: price −0.84%, open interest +3.42%. Shorts closing, 4 October 19:00–23:00: price +1.29%, open interest −2.04%.

A reading, not a fact

Open interest also says nothing about where the positions were opened, or with how much leverage. Two markets with the same open interest can be very different places to be.

Check yourself · 1 of 3Open interest rises by 3,000 BTC in an hour. What happened?
Show the answer

Every contract has both sides. Rising open interest means more contracts exist; it does not say longs outnumber shorts.

Check yourself · 2 of 3Price rises 1.3% while open interest falls 2%. What is the usual reading?
Show the answer

Positions are being closed while price rises: the eager buyers are shorts buying back. When they are done, the buying may stop.

Check yourself · 3 of 3Open interest stays flat while a lot of contracts trade. How is that possible?
Show the answer

When a new trader takes over a position someone is closing, no contract is created or removed — volume without a change in open interest.

Takeaways
  1. Open interest is the number of open contracts; every contract has a long and a short side.
  2. It rises when new contracts are opened and falls when they are closed.
  3. Read it with price: up/up new longs, up/down shorts closing, down/up new shorts, down/down longs closing.
  4. Who "opened" is a reading — taker delta shows which side was in a hurry.

Open the BTC perpetual in the terminal — open interest is in the Market tab

Further reading

Education only, not financial advice · Updated 27 Oct 2026 · Data: Binance · Report a mistake