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Explain the Concept of ‘Backwardation’ in Traditional Futures and Its Equivalent in Perpetual Swaps.

Backwardation is when the price of a traditional futures contract is lower than the spot price. In perpetual swaps, the equivalent is when the swap price is trading at a discount to the spot price, which is reflected by a negative funding rate.

Both indicate a market expectation of a future price drop.

How Does the Basis between Perpetual Futures and Spot Price Relate to the Funding Rate?
How Can a Trader Use a Negative Funding Rate to Execute a ‘Cash and Carry’ Arbitrage Strategy?
How Does the ‘Funding Rate’ Mechanism Ensure the Perpetual Swap Price Tracks the Spot Price?
How Does the Concept of “Contango” or “Backwardation” Apply to Perpetual Futures?