A Guide to Crypto Open Interest on TradingView

Unlocking Market Sentiment: A Guide to Crypto Open Interest on TradingView

In the volatile world of cryptocurrency trading, price action alone doesn’t always tell the full story. Understanding the commitment behind a move—whether it’s driven by new money or people rushing for the exit—is crucial. A recent tutorial on the TradingView channel dives into Crypto Open Interest, a powerful indicator that reveals the “real-time pulse” of market leverage.

Here is a breakdown of what Open Interest is, how to find it, and how to interpret it to make better trading decisions.

What is Open Interest?

Open Interest represents the total number of outstanding, unsettled derivative contracts (like futures) in the market at any given moment. Unlike volume, which counts every transaction, Open Interest only grows when new positions are created.

• Rising Open Interest: New money is flowing into the market.
• Falling Open Interest: Traders are closing out positions.

How to Add It to Your Chart

1. Open a crypto chart (e.g., Bitcoin Futures on Bybit).
2. Click on the Indicators, Metrics & Strategies icon at the top of the screen.
3. Search for “Crypto Open Interest”.
4. Select the indicator to add it to the bottom panel of your chart.

Note: The standard TradingView indicator shows data for the specific exchange you are viewing (e.g., Bybit). To see the total market picture, you can search for “Aggregated Open Interest” indicators in the community library, which sum up data from major exchanges like Binance, Bybit, and Kraken.

Interpreting the Signals

The key to using this tool is analyzing the relationship between Price and Open Interest. The video outlines four main scenarios:

1. Price Rising + Open Interest Rising:
   • Signal: Strong Bullish Sentiment.
   • Meaning: New money is fueling the uptrend. The move is supported by active buyers opening fresh long positions.
2. Price Rising + Open Interest Falling:
   • Signal: Weak Uptrend / Short Covering.
   • Meaning: The price is going up because short sellers are closing their positions (buying back), not because of new aggressive buying. This trend may be nearing exhaustion.
3. Price Falling + Open Interest Rising:
   • Signal: Strong Bearish Sentiment.
   • Meaning: New money is entering the market to short the asset. The downtrend is being aggressively supported.
4. Price Falling + Open Interest Falling:
   • Signal: Weak Downtrend / Long Liquidations.
   • Meaning: Traders are closing their positions (selling to exit), often due to stop-losses or lack of interest. The momentum is fading.

Advanced Analysis

For those looking to go deeper, the tutorial mentions Footprint Charts. These advanced charts break down Open Interest changes inside each candle, showing you exactly where longs are opening or shorts are covering tick-by-tick. This level of detail helps identify support/resistance zones and potential liquidation cascades.

By mastering Open Interest, you gain a view into who is participating in the market, helping you distinguish between a genuine breakout and a “FOMO” trap.

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