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

Contango is a market state where the futures price of an asset is higher than its spot price. This is common when traders expect the price to rise or when there is a high cost of carry.

Backwardation is the opposite, where the futures price is lower than the spot price. This often indicates bearish sentiment or an expected price drop, or a shortage in the spot market.