Open interest does not distinguish between long and short positions. At the structural level, it can be interpreted as a bullish signal. The Solana Derivative Market (Sun) in the Chicago Mercantile Stock Exchange (CME) is giving positive signals for the asset. During September, there was a strong increase in open interest (OI). The amount of futures contracts went from 8,000 million to 16,623 million dollars.
This growth can be observed in the following graph, which shows the daily volume of solana contracts (blue bars) along with the evolution of open interest (celestial line).
Solana’s OI doubled in the last month (celestial line). Source: CME Group. Now, what does this mean? The first thing to clarify is that The CME is the main regulated market of digital active derivatives in the United Stateswhere institutional banks, banks and traders operate. The fact that the open interest has been duplicated reflects a significant increase in the participation of investors, both institutional and retail, which are actively betting on the cryptocurrency futures market.
Although the growth of the OI can be interpreted at a structural level as an upward signal, it is not necessarily. It happens that this metric does not distinguish between long and short positions. If leverage longs predominate, it indicates bullish expectation, but increases the risk of liquidations against falls; If there are many short positions, you can reflect risk coverage or bassist bets, as explained in cryptopedia, educational section of cryptootics. A rapid OI growth usually generates greater volatility, since any abrupt movement can trigger liquidations waterfalls. However, it should be noted that the entry of regulated institutional capital represents a bullish factor at the structural level, since it can not only sustain the price in the medium term, but also increase the visibility of the asset among traditional investors.
