Open Interest Climbs After the Short Squeeze: Why the Longs Are Paying Now

On September 21, 2026, a short squeeze carried the crypto market to its highest level in eight months. The number that matters most, however, is not on the price board: while exchanges were force-closing bearish bets, open interest in the futures market did not fall. It rose. The market did not shed risk, it reshuffled it. Anyone running leverage should recalculate three things tonight: funding costs, their own liquidation price, and the question of which legal framework their position actually sits under.

Short squeeze and $648 million in liquidations: what happened in the futures market

A short squeeze is a chain reaction. Once the price climbs past the pain threshold of leveraged sellers, exchanges close their positions automatically. That closing is itself a purchase, which pushes the price higher and catches the next group.

That is exactly what played out on Monday. CoinDesk puts the value of the short positions that were force-closed at $648 million and reports at the same time that open interest across the whole market climbed 7.59 percent to around $156 billion.

On the price picture: bitcoin traded at $86,749 on September 21, 2026 at 21:47 UTC according to CoinGecko, a gain of 7.30 percent within 24 hours. Ether added 5.82 percent, XRP 10.33 percent, Solana 8.84 percent. The all-time high of $126,080 still dates from October 6, 2025, which leaves a gap of roughly 31 percent.

Open interest explained: why a rising number is not a buy signal

Open interest is the sum of all futures contracts that are currently open and have not yet been closed out. It counts contracts, not people, and not money that has flowed into the market.

That gives it a property which is often misread. Every open contract has two sides, a buyer and a seller. Open interest therefore never tells you whether the market is positioned bullishly or bearishly. It measures one thing only: how much leverage sits in the system in total.

What the combination of price and open interest tells you

The number only becomes meaningful alongside the price move. If the price rises while open interest falls, what has mostly happened is covering: old positions were closed and the move is running out of fuel. If the price rises and open interest rises with it, new leveraged positions are being added.

The second case is today's. It is not automatically a bad thing, because fresh capital carries moves. But it does mean that the number of positions which can be force-closed on a counter-move is larger after the squeeze than it was before.

Funding rate tested in house: 24 of the 25 largest bitcoin perpetuals are positive

Rather than rely on someone else's snapshot, we queried the state of the futures market ourselves. This analysis was carried out by cryptoticker.io on September 21, 2026.

Method and scope

On September 21, 2026 at 21:56 UTC we called four public interfaces that require no access credentials: the derivatives overview from CoinGecko, the funding endpoint from OKX, the futures overview from Deribit and the market data from Hyperliquid. All four answered with HTTP 200. From the CoinGecko response, which listed 27,029 derivatives, we filtered out the 133 bitcoin perpetuals that report an open interest figure.

The result in numbers. Together, those 133 contracts carry open interest of roughly $81.1 billion. Looking at the 25 largest of them, the funding rate is positive on 24, with a median of 0.00594 percent per settlement period. Positive, in this mechanism, means the long side pays the short side.

The individual readings back that up. OKX reported 0.0096 percent per eight hours for the BTC-USDT-SWAP contract, Hyperliquid 0.00125 percent per hour on open interest of 44,002 bitcoin, and Deribit 0.0186 percent per eight hours for its bitcoin perpetual on $927.9 million of open interest. Across all twelve bitcoin futures on Deribit, open interest adds up to $1.87 billion.

What we could not verify

The interfaces of Binance and Bybit rejected our call with HTTP 451 and HTTP 403 respectively, because they block requests from certain regions. The figures from those two exchanges therefore only sit inside the CoinGecko aggregation and do not come from a direct call of our own. As a cross-check we compared the CoinGecko value for OKX against our direct OKX call; both were in the same range, which speaks for the reliability of the aggregation. We were also unable to verify how open interest is distributed across individual market participants. That data is not publicly available.

One note on putting the orders of magnitude in context: our $81.1 billion refers to bitcoin perpetuals alone. The $156 billion cited by CoinDesk covers the entire futures market across all crypto assets. The two numbers do not contradict each other, they measure different slices.

What the funding rate costs you over a year: around ten percent of position value

A perpetual future has no expiry date. To keep its price glued to the spot market anyway, one side pays the other at fixed intervals. That payment is the funding rate, and it is the price of holding a leveraged position open.

The percentages look tiny, yet they fall due several times a day. The 0.0096 percent per eight hours at OKX works out to roughly 10.5 percent over a year. Hyperliquid's 0.00125 percent per hour comes to about 10.9 percent a year, and the Deribit reading would run to a good 20 percent if it stayed at that level.

A worked example

Suppose you hold a long position worth $10,000 with funding at 0.0096 percent per eight hours. That drains roughly 96 cents per settlement, just under three dollars a day, a good twenty dollars a week. At five times leverage you have only committed $2,000 of your own capital, but payment is calculated on the full position value. Measured against the capital you actually put up, that 10.5 percent a year is closer to 52 percent.

The second half of that sentence is the important one: the funding rate is not a fixed quantity. It is reset continuously and it flips negative as soon as the short side dominates. Today's readings are a snapshot from 21:56 UTC, not a forecast.

Recalculate your liquidation price after the rally: the buffer has shrunk

After a seven percent move in a single day, yesterday's arithmetic no longer holds. Anyone who added to a long position during the climb, or opened one, has shifted their average entry upward and shortened the distance to liquidation in the process.

Three quantities determine that distance: entry price, posted margin and chosen leverage. We have worked through how those produce the actual price at which the exchange closes you out, step by step, in a guide of its own: how to calculate your liquidation price.

Today supplies the argument for why that calculation is not a formality. The $648 million lost on the short side belonged to market participants who either never did the same arithmetic or cut it too fine. The mechanism has no preferred direction: it works just as reliably on the way down.

Perpetual futures, CFD or coin: what applies under MiCA and MiFID II

This is the point where German investors regularly mix something up. The European MiCA regulation governs crypto assets and the services built on them, meaning trading, exchange and custody. A derivative on a crypto asset, by contrast, is a financial instrument and falls under MiFID II. A MiCA licence held by your exchange therefore does not cover perpetual futures.

The route through a regulated broker

A retail client in Germany who wants leveraged exposure to crypto prices gets it from a MiFID-regulated broker in the form of CFDs. Tight limits apply there: BaFin prohibited contracts for difference with an additional-payment obligation for retail clients back in 2017 and reissued that general administrative act in 2019, negative balance protection is mandatory, and leverage on crypto assets is capped at 2:1. You cannot lose more than the capital you paid in. Which providers operate under which supervision is set out in our overview of perp DEX platforms.

The route through a platform without an EU licence

That 2:1 cap is the reason many people move to platforms that hold no EU licence. What falls away in the process deserves to be named: no negative balance protection under German supervisory law, no deposit guarantee, no German complaints body, and in a dispute a place of jurisdiction outside the EU. The BitMEX case shows where a story like that can end: the exchange is shutting down operations on September 23, 2026, and users have to withdraw their balances themselves in time.

Tax on crypto derivatives: why the one-year holding period does not apply here

Many German investors automatically assume the one-year rule applies to crypto. For derivatives that is wrong, and the difference is written into the statute.

The familiar holding period is set out in section 23(1) sentence 1 no. 2 of the German Income Tax Act and applies to disposals of other assets where no more than one year lies between acquisition and sale. The coin itself falls under that. A forward transaction in which you obtain a cash settlement, on the other hand, is governed by section 20(2) sentence 1 no. 3 of the Income Tax Act and therefore counts as investment income.

In practice that means gains from crypto derivatives are subject to the flat-rate withholding tax, and there is no holding period after which they become tax free. Losses from investment income may also not be offset against income from other categories under section 20(6) sentence 1, and only reduce future investment income. A loss on a derivative cannot be set against a gain from selling your coins.

One qualification belongs here, because it affects a lot of people: exactly how a perpetual future on a platform without an EU licence is to be classified for tax purposes is disputed among specialists and is not conclusively settled in the German finance ministry's guidance on crypto assets. Anyone trading there should settle the classification with a tax adviser and keep their own records from day one.

Custody at the futures exchange: what a balance on a margin account really is

For as long as a leveraged position is running, the margin you posted sits with the exchange. What you hold is not a coin but a claim against a company. At a platform without an EU licence, that claim is worth exactly as much as the operator's solvency and honesty.

From that follows a plain separation that holds up in daily practice. Capital you hold for the long term belongs in your own custody. Only as much sits on the futures exchange as the open positions and a buffer require. Anyone who leaves profits standing after a strong day because withdrawing is a nuisance is increasing precisely the sum that would be exposed if things go wrong.

Levels above and below: how to tell whether leverage is being unwound

For the next few days it pays to watch two quantities at once, the price and the positioning.

To the upside

The eight-month high set in today's session is the first level. If the price holds above it while open interest declines, that argues for a move carried by spot buying rather than by leverage. If both keep rising instead, the market stays vulnerable, and funding costs for the long side tend to rise with it.

To the downside

The other direction is the more interesting one, because that is where the positions built today are sitting. If the price falls back into the zone the squeeze started from, the forced closures will hit the long side this time. A decline in open interest on a falling price would be the sign that this is what is happening.

None of that is a forecast, and it is not meant as one. The funding rate from 21:56 UTC describes how the market was positioned at that moment, and it can flip within a few hours.

Checking open interest and the funding rate: what to take away

1. Work out your running costs before you extend the position. Take the current funding rate at your exchange, multiply it by the number of settlements per year and measure the result against the equity you have committed, not against the position value. Which providers let you trade under German and European supervision is set out in our crypto broker comparison.
2. Set your liquidation price again, and write it down. After a day with a seven percent move, yesterday's figure is out of date. Note the price at which you will be closed out and how much margin you would have to add. For documenting your trades across the year, the tools in our overview of crypto tax software help, because derivatives are taxed at the flat rate with no holding period.
3. Keep trading capital separate from holdings. Withdraw whatever the open positions do not need, and store long-term holdings where you hold the keys. If you want to switch platform for that, our crypto exchange comparison helps you pick a regulated address.

(As of September 21, 2026. This article is not investment advice. Prices and fee structures change; check the terms with the provider before you buy.)