Average Daily Open Interest refers to the mean number of outstanding, unclosed derivative contracts for a specific asset over a 24-hour period. This metric provides a quantifiable measure of market commitment and liquidity within the crypto derivatives trading environment. It indicates the total number of futures or options contracts that market participants hold and have not yet settled or expired.
Mechanism
The calculation involves aggregating the total open interest at regular intervals throughout the trading day and then dividing by the number of observation points. Each open contract represents a buyer and a seller, signifying an active position that has not been offset by an opposite trade or delivery. This aggregate value fluctuates with new contract initiations and liquidations.
Methodology
This data point serves as a key analytical tool for assessing market depth, potential price movements, and the strength of prevailing trends in crypto investing. A rising average daily open interest, alongside price increases, often signals growing capital inflow and conviction in an asset’s trajectory. Conversely, a declining figure can indicate waning market participation or position closures.
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