Crypto derivatives are financial contracts whose value is derived from an underlying cryptocurrency. Unlike the spot market, where you buy and sell actual coins, the derivatives market allows you to speculate on an asset's future price without owning it. This market includes two main types of contracts: futures and perpetuals. Futures contracts have a predetermined expiry date, while perpetual contracts do not, making them more popular for continuous trading.

Key metrics like open interest (the total number of outstanding contracts), funding rates (payments between long and short traders in perpetuals), and trading volume provide deep insights into market sentiment. High open interest suggests strong market participation, while the funding rate can indicate whether more traders are betting on the price going up (long) or down (short). By analyzing this data, traders can gauge market conviction and identify potential trends. This page shows 100 contracts at a time; use the pagination to explore the entire derivatives market.

Open Interest: This represents the total value of all outstanding derivative contracts that have not been settled. A rising open interest alongside a rising price confirms an uptrend, indicating new money is entering the market. Conversely, falling open interest suggests traders are closing their positions, which can signal a trend reversal.

Funding Rate: In perpetual contracts, the funding rate is a mechanism that keeps the contract price aligned with the spot price. A positive funding rate means longs pay shorts, suggesting bullish sentiment. A negative rate means shorts pay longs, indicating bearish sentiment.

Basis: This is the difference between the futures price and the spot price. A positive basis (contango) means futures are trading at a premium, often seen in bull markets. A negative basis (backwardation) means futures are trading at a discount, which can occur in bear markets.

Spread: The bid-ask spread is the gap between the highest bid and the lowest ask price. A tight spread indicates high liquidity, meaning it's easy to trade without significantly affecting the price.

Analyzing crypto derivatives data goes beyond just looking at price; it offers a deeper understanding of market psychology and potential future movements. For instance, if the price is rising but open interest is falling, it could signal that the rally is losing momentum and may soon reverse as traders close their positions. This is known as a price-open interest divergence.

The funding rate is another powerful tool. Consistently high positive funding rates indicate an overcrowded long trade, which can lead to a "long squeeze"—a rapid price drop that forces leveraged long positions to liquidate, accelerating the decline. Conversely, deeply negative funding rates can set the stage for a "short squeeze."

Traders also watch futures expiry dates closely. As a major expiry date approaches, volatility can increase as traders roll over or close their positions. Because derivatives trading involves leverage, it comes with significant liquidation risks. A sudden price move against a trader's position can trigger an automatic closure of their position, resulting in a total loss of their initial margin. Therefore, understanding these metrics is crucial for risk management.