Open interest and funding are usually shown in separate columns and read separately. They belong together. Open interest tells you how many contracts are open. Funding tells you which side is paying to hold them. One gives the amount and the other gives the side.
Rising open interest, rising funding
New positions are being opened, and longs are the ones pushing. They are buying the perp above its reference and paying for it. Leverage is building on the long side. This is the pattern most people mean when they say a rally is leveraged.
Rising open interest, falling or negative funding
New positions again, but the pressure is from shorts. The perp is being sold below its reference and shorts are paying, or longs are paying less than before. Leverage is building on the short side. If price is holding up while this happens, someone is absorbing that selling in spot.
Falling or flat open interest
Positions are being closed. Watch what funding does as they go. If it was high and is easing, crowded longs are leaving. If it was negative and is rising toward neutral, shorts are covering. When open interest drops fast with heavy liquidation flow, the leaving was forced.
No one is adding and no one is paying up. There is no positioning story in this state, and it is better to say so than to squeeze a read out of small changes.
How this differs from the price quadrant
The common framework pairs open interest with price, as in the four regimes of open interest and price. That works by inference: price rose and open interest rose, so longs were probably the aggressors. Funding measures the same thing more directly, because it comes from where the perp trades against its reference. The two frameworks are best used together. When they agree the read is firmer.
Rules that keep it honest
Read the pair on one venue at a time. The same coin shows different funding on different venues, as one coin, six funding rates shows, and open interest is split the same way, as in open interest by venue. Pairing one venue’s funding with another’s open interest describes no market.
Two more cautions. Open interest quoted in dollars rises when price rises, even if no contract was added, so check it in coins where possible. And funding has limits built into its formula, covered in funding rate caps and clamps, so a pinned rate can understate the pressure.
Where to see it
The NoVo Crypto Market Map shows open interest and funding per venue side by side for each coin, with 24-hour liquidation flow. Dr. NoVo, the Financial Markets Super Intelligence, reads the pair together.