What Is the ‘Cost of Carry’ That Contributes to Contango in Bitcoin Futures?

The Cost of Carry (CoC) is the net cost of holding the underlying asset until the futures expiration date. For Bitcoin, the primary components of CoC are the interest rate (or cost of borrowing the capital to purchase the spot Bitcoin) and any storage or insurance costs.

In a cash-settled futures market, the CoC is primarily the financing cost, which is reflected in the futures price being higher than the spot price during Contango.