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

Contango is a market condition where the futures price of a cryptocurrency is higher than its current spot price. This typically occurs when the market expects the price to rise or due to the cost of carry.

Backwardation is the opposite, where the futures price is lower than the spot price, often signaling a bearish market expectation or a shortage of the asset. Miners hedging with a short futures contract generally prefer contango, as it locks in a higher selling price.