What Is the Implication of Backwardation for the Future Price Movement of a Cryptocurrency?

Backwardation, where the futures price is lower than the spot price, often implies a strong bearish sentiment in the market. Traders are willing to sell the asset at a lower price in the future, suggesting an expectation of price decline.

It can also indicate a high demand for the spot asset (e.g. to cover short positions or for immediate use), which drives the spot price up relative to the futures price.