Open Interest futures in Bitcoin represents the total number of futures contracts that have not been closed at the end of the day. In other words, it reflects the number of open positions, both long and short, that are still active in the market.

This indicator provides insight into market activity as it reflects the accumulated interest of participants in keeping their positions open.

The Open Interest calculation is done by adding the total number of open long and short contracts in the BTC market. Each contract has a buyer and a seller, so the total number of open contracts is equal to twice the number of participants in the market.

The OI is an interesting metric for bitcoin traders because:

• Evaluate market sentiment: A high OI indicates that there is greater interest in the market, whether from traders betting on an increase (long positions) or a decrease (short positions).

• Volatility Prediction: An increase in OI may suggest that greater volatility is coming in the price of Bitcoin, as there are more traders with open positions who are willing to take risks.

• Identification of possible trends: Analyzing the OI along with the price can help identify possible trends in the market. For example, a rise in OI along with a rise in price may indicate an uptrend.

An increase in Open Interest is usually positive for the current trend as it suggests greater interest and commitment from market participants. If the price is rising and the Open Interest is also rising, it indicates substantial support for the uptrend.

A decrease in Open Interest can be a sign of exhaustion, as it could indicate that interest in the market is decreasing. This could suggest that the current trend could be losing steam.

So it can be used for:

• Confirm trends: An uptrend supported by an increase in Open Interest is more likely to be sustainable.

• Trend reversal: Sudden changes in Open Interest can be indicative of possible changes in market direction. An increase in Open Interest during a downtrend could signal a potential reversal.

• Assess market sentiment: Open Interest can also provide information on overall market sentiment. An increase in Open Interest along with an increase in prices could indicate positive sentiment and vice versa.

At BGeometrics we have a graph that is updated daily with the Bitcoin Open Interest Futures

Categories: Bitcoin, BTC, Chart, Trader, Trading