Derivatives & Risk

What is backwardation in futures markets?

Backwardation is a futures market condition where the futures price trades below the current spot price. It signals that participants expect the price to fall by expiry, or that there is strong immediate demand to hold the asset now. For example, if Bitcoin spot is 60,000 but the three-month future is 58,000, the market is in backwardation. As expiry nears, the futures price tends to rise toward spot. In crypto it often reflects bearish positioning or funding pressure, and reading it as a forecast carries risk.

Crypto investments are subject to market risk and volatility. Past performance is not indicative of future returns. This is general information, not investment advice — consider your own circumstances or consult a qualified adviser before investing.