How Does Backwardation Differ from Contango in Cryptocurrency Futures Markets? ⎊ Path

How Does Backwardation Differ from Contango in Cryptocurrency Futures Markets?

Backwardation and contango are opposite market conditions. In backwardation, the futures price of a cryptocurrency is lower than its current spot price, suggesting expectations of a future price decrease or high immediate demand.

Conversely, contango occurs when the futures price is higher than the spot price. This indicates that the market expects the price to rise in the future or reflects the costs of holding the asset, such as storage and financing.

Bullish sentiment often leads to contango, while bearish sentiment can result in backwardation.

Define ‘Contango’ and ‘Backwardation’ in the Context of Crypto Futures Pricing

Which Market Condition, Backwardation or Contango, Is More Common in Cryptocurrency Markets and Why?

Which Type of Segregation (Pledged or Unpledged) Is Typically More Expensive for the Client?

What Is the Difference between a ‘Contango’ and ‘Backwardation’ Market Structure in Crypto Futures?

What Is “Contango” and “Backwardation” in Futures Markets?

How Is the Concept of “Contango” and “Backwardation” Applied to VIX Futures?

How Does Market Sentiment Influence the Shape of the Cryptocurrency Futures Curve?

What Are the Typical Costs of Carry Associated with Holding Cryptocurrencies?

Glossar

Backwardation and Contango

Market ⎊ Backwardation and contango describe the relationship between the spot price of an asset and the price of its futures contracts across different maturities.

Contango in Cryptocurrency

Definition ⎊ Contango in Cryptocurrency describes a market condition where the price of a futures contract is trading above the current spot price of the underlying digital asset.