What Is a “Contango” and “Backwardation” Market Structure in Crypto Futures?

Contango is a market structure where the futures price is higher than the spot price, or longer-dated futures are priced higher than shorter-dated ones. This typically occurs in normal markets due to the cost of carry.

Backwardation is the opposite, where the futures price is lower than the spot price. This is often seen in high-demand or high-volatility environments, reflecting market expectations of a future price drop or a temporary supply shortage.