What is open interest?
Open interest is the number of contracts that remain outstanding rather than being closed or settled. A contract has both a long and a short side; counting open interest is not the same as counting only bullish or only bearish traders. The CME Group glossary defines it in terms of open contracts.
Check the unit on a chart. Some providers display contracts, some display units of the underlying asset, and others show a notional currency value. A dollar-denominated series can change when the asset price changes even if the number of contracts does not. Compare like-for-like figures and read the provider's specification.
What is a funding rate?
Perpetual-futures contracts use funding payments to help align the contract price with its reference market. Under the common convention described by Coinbase International Exchange, a positive funding rate means longs pay shorts; a negative rate means shorts pay longs.
The payment interval, rate calculation, caps, and settlement rules depend on the venue and contract. An hourly rate and an eight-hour rate are not directly comparable. A displayed annualized rate is not a promise that the current rate will persist.
A hypothetical funding example
Suppose a contract applies a funding rate of positive 0.01% to $10,000 of position notional for one funding interval. Under a simple notional-times-rate calculation, that interval's payment is $1, paid by the long side to the short side. This example excludes price movement and trading fees, and does not describe every contract's rules. Check the actual specification before calculating a real payment.
What these numbers do not establish
Rising open interest does not prove that all new positions are speculative longs. A position can be part of a hedge, a spread, or another strategy. Positive funding does not prove that a price reversal is imminent. High reported activity does not guarantee that your order can be executed at the reference price.
Use the figures to form research questions: are you comparing the same contract and interval, has the unit changed, and what other evidence supports your interpretation? Avoid turning one chart into a prediction.
Before comparing two charts
- Identify the venue, instrument, collateral, and quote currency.
- Read whether open interest is shown in contracts, coin units, or currency notional.
- Check whether funding is historical, currently estimated, or annualized.
- Match timestamps and funding intervals.
- Review the contract's margin, liquidation, and fee rules separately.
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