Liquidation Cascade vs Open Interest

A self-reinforcing sequence of forced position closures in which one tier of liquidations drives price movement that triggers the next tier; the mechanism behind crypto's most extreme price crashes; most severe when open interest is high and leverage concentration is elevated.

The total number of outstanding derivative contracts that have not been settled or closed; a measure of committed capital rather than direction; rising OI indicates new money entering; falling OI indicates positions being closed.