Open interest counts outstanding contracts
Open interest measures contracts that remain open, rather than the total quantity traded during a period. Volume counts trading activity. A market can have high volume while open interest changes little because positions are repeatedly opened and closed.
Each contract has a long and a short side, so rising open interest is not simply “more longs than shorts.” It shows an increase in outstanding exposure. You need price, funding and other context to interpret how that exposure is being expressed.
Read changes alongside price
Price rising with rising open interest can indicate new exposure joining the move. Price rising while open interest falls can include short covering. These are interpretations to investigate, not mechanical buy or sell rules.
Check the unit: contract count, base-asset amount and dollar notional are not interchangeable. Dollar open interest can rise partly because the underlying asset’s price increased, even without the same increase in contract count.
Liquidations are forced position reductions
Liquidation occurs when a position or account no longer satisfies the venue’s margin requirement. Forced closing can add buying or selling pressure, particularly in a thin market. Several liquidations can occur during the same sharp move.
A liquidation print describes something that happened. A liquidation heatmap may instead estimate where future liquidations could cluster. Treat estimates as model outputs, and check their coverage and assumptions rather than reading them as a list of guaranteed future orders.
Ask a better market question
In TRUE, ask: “Did price move with expanding open interest, or did exposure unwind? Show the time period, venues and funding context.” This invites an explanation of the data instead of a single directional label.
For your own position, the relevant numbers are your collateral, leverage, margin requirement and liquidation estimate. Market-wide liquidation data adds context but does not replace those account-specific controls.