Open interest measures outstanding derivative contracts that have not been closed or settled. Each contract has a long and a short side, but standard contract-count open interest counts that matched contract once, not twice.
How it changes
When a new buyer and new seller both open one contract, open interest increases by one. When both sides close an existing contract, it decreases by one. If an existing holder transfers exposure to a new holder, the count can remain unchanged even though trading volume rises.
Volume measures trading activity during a period; open interest measures exposure still outstanding at a point in time. They answer different questions and should not be substituted for one another.
Reading the data carefully
Crypto dashboards may express open interest in contracts, coin units or a currency value. Currency-denominated open interest can rise because prices increased, even if contract quantities did not. Compare the same units, instruments, venues and timestamps.
Rising open interest does not by itself prove bullish sentiment, since every new contract also has a seller. Price, funding and positioning context may help interpretation, but open interest alone cannot reveal each trader’s motive or reliably predict the next market move.