What Is the Term for a Situation Where the Futures Price Is Lower than the Spot Price?
This situation is known as "backwardation." It is typically seen as an abnormal market condition where the current spot price is higher than the price of the futures contract for a later date. This can indicate an immediate shortage of the underlying asset or strong negative market sentiment about the future price.
Glossar
Backwardation
Contango ⎊ ⎊ Backwardation, within cryptocurrency derivatives markets, signifies a futures contract price trading below the expected spot price, a deviation from the more common contango structure.
Negative Market Sentiment
Contraction ⎊ Negative market sentiment within cryptocurrency, options, and derivatives signifies a prevailing pessimistic outlook among traders, often manifesting as increased selling pressure and reduced bid-ask spreads.
Current Spot Price
Price ⎊ The current spot price, within cryptocurrency markets, represents the prevailing market value for immediate delivery of a specific digital asset.