Some observations and insights about $HMSTR$.

Previously, I noticed a phenomenon — when the open interest (OI) approaches the market capitalization, the price tends to weaken. Recently, I asked AI to clarify and found out that these two data points actually have no inherent connection. The reason is simple: OI is data at the contract level, while market cap is at the spot level. As long as there are counterparty orders in the derivatives market, the open interest can completely exceed the total spot market capitalization.

Therefore, instead of fixating on this indicator, it’s better to look at it from a different perspective — the accumulation of derivatives positions relative to the spot volume. The more aggressively positions are stacked, the weaker the market’s resistance. Once liquidation triggers, the chain reaction can be very fierce.

But the most practical approach is to monitor the real-time movements of the funding rate. The deeper the negative funding rate, the more concentrated the bearish force. Usually, market makers won’t dare to let the price fall unless they are also shorting in coordination. A truly dangerous signal is — when the negative funding rate stops expanding and begins to narrow, which often indicates a turning point is approaching.