Definition ∞ Open interest growth refers to an increase in the total number of outstanding derivative contracts, such as futures or options, that have not yet been settled or closed, pertaining to a specific digital asset. This metric indicates rising market participation and liquidity in derivative markets, often signaling increased speculative activity or hedging strategies. A substantial rise in open interest can precede significant price movements, reflecting growing conviction among traders. It provides insight into market depth and sentiment.
Context ∞ Open interest growth is a closely watched indicator in cryptocurrency derivatives markets, frequently analyzed in news reports to gauge market sentiment and potential future price volatility. A key discussion involves interpreting whether rising open interest suggests a continuation of current trends or an impending reversal. Future analysis will continue to examine this metric in conjunction with funding rates and trading volumes to predict market direction.
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