This paper is the first part of the series where I will cover highly requested and fairly underrated concepts of crypto market data analysis. The fundamental ideas of decentralization and transparency also reflect in unique access to all sorts of data in regard to cryptocurrency markets and their activity. Those coming from trading in traditional markets are often confused and shocked when they see how much real-time data crypto exchanges provide to market participants. No matter the strategies you choose to use in trading, analyzing derivatives data is an edge that can only benefit you. It will not serve you as some kind of magic buy/sell indicator but as something much better and more realistic – a deeper understanding of market activity on different levels. It will give you an idea of what is actually going on behind those candles you see on the screen. It will help you understand the market sentiment and expect what could happen in near future. Since some concepts might appear difficult to some, I will do my best to present the information in the simplest form possible. If you have any questions, don’t hesitate to get in touch with me on Twitter or just send a message to my Telegram and Discord community where I will gladly help you. I have also opened a YouTube channel where I will post educational trading content in the form of videos since I know most people find them easier to learn from
Before we jump into the Open Interest, I would like to go over some basic market mechanics, especially in regard to perpetual futures or derivatives in general. It is essential to know these basic concepts in order to properly understand OI.