Derived from Coindesk, Bitcoin futures have returned to their deepest backwardation since the FTX collapse in November 2022, with the CME Bitcoin annualized basis reaching -2.35%. Backwardation occurs when near-term futures trade at higher prices than longer-dated contracts, signaling weaker price expectations over time. This marks a reversal from the usual contango structure in Bitcoin futures. The shift into backwardation first appeared on Nov. 19, just before Bitcoin hit a low of $80,000 on Nov. 21. The recent correction has led to significant leverage unwinding and reduced institutional exposure. Historically, backwardation has aligned with market lows, but it does not guarantee a bullish reversal. CME futures, being cash-settled and used in basis trades, can reflect cautious pricing rather than strong spot demand. While much leverage has already been removed, further risk aversion could worsen conditions. However, such backwardation has also historically marked turning points after forced selling subsides.
Bitcoin Futures Enter Deepest Backwardation Since FTX Collapse
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