Volume and open interest are often quoted side by side and describe quite different things. One measures activity, the other measures commitment, and the relationship between them is where the information sits.
Two measurements of the same market
Volume counts contracts changing hands over a period and resets each time the period does.
Open interest counts contracts currently outstanding, meaning positions opened and not yet closed. It is a level rather than a flow.
A trade can raise open interest, lower it, or leave it unchanged, depending on whether each side is opening or closing a position.
The combination indicates what the flow is doing
Rising volume alongside rising open interest means new positions are being established, so capital is entering the market.
Rising volume with falling open interest means positions are being closed, so the activity is exit rather than entry, even though the volume figure looks identical.
Price moving on falling open interest is therefore a different event from the same move on rising open interest, and the distinction is the main reason the second figure is tracked.
High open interest means fragility
Outstanding leveraged positions are collateralised, and each one has a level at which it will be closed automatically.
A large accumulation of positions on one side means a move against them triggers forced closures, and those closures are market orders that push price further in the same direction.
This is why sharp moves often coincide with open interest falling steeply. The positions did not choose to close; they were closed by the exchange.
Denomination changes what you are reading
Open interest reported in currency terms moves with price even if no position changes, since the same number of contracts is worth more when the asset appreciates.
Measured in units of the underlying asset, it isolates the change in positions from the change in price.
Comparing the two versions separates growth in leverage from growth in the value of existing leverage, which look identical in a currency-denominated chart.
Aggregation across venues is imperfect
Each platform reports its own figure, and contract specifications, collateral types and settlement differ between them.
Aggregated totals combine instruments that are not identical, and a single large venue can dominate the total and the apparent trend within it.
Read alongside funding rates, which show which side is paying to hold positions, open interest describes both the size of the leverage in the system and its direction.