Are There Arbitrage Opportunities in Both Backwardation and Contango Markets?

Yes, both backwardation and contango can create arbitrage opportunities. In a contango market, an arbitrageur could simultaneously buy the cryptocurrency at the spot price and sell a futures contract.

They would then hold the asset until the contract's expiration, delivering it and profiting from the price difference, minus any costs of carry. In a backwardation market, the opposite trade, known as a reverse cash-and-carry arbitrage, is possible.

This involves short-selling the spot asset and buying a futures contract, with the aim of profiting from the futures price converging upwards to the spot price.