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What is the difference between open interest and trading volume in the cryptocurrency market?

avatarMangesh AzadMar 15, 2022 · 3 years ago1 answers

Can you explain the distinction between open interest and trading volume in the cryptocurrency market? How do these two metrics differ in terms of their significance and how they are calculated?

What is the difference between open interest and trading volume in the cryptocurrency market?
Cryptocurrency
Open Interest
Trading Volume

1 answers

  • avatarMar 15, 2022 · 3 years ago
    Open interest and trading volume are two commonly used metrics in the cryptocurrency market. Open interest refers to the total number of outstanding contracts, which includes both long and short positions. It represents the total amount of money invested in those contracts. On the other hand, trading volume measures the total number of contracts traded within a specific time period. It indicates the level of market activity and liquidity. While open interest reflects the overall market sentiment, trading volume shows the actual trading activities. Traders often use both metrics to assess market trends and make trading decisions. It's important to note that open interest and trading volume can vary across different exchanges and trading pairs.

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