Bitcoin Price (BTC) Analysis: High Level of Backwardation Hints at Bottom
Deep backwardation in Bitcoin futures, the deepest since the FTX collapse, suggests potential market stress or a local bottom.Summary
The CME bitcoin annualized basis has reached -2.35% backwardation, the deepest level since the FTX collapse in November 2022. Backwardation occurs when near-term futures trade at a higher price than longer-term contracts, signaling traders expect weaker prices over time, which is unusual for Bitcoin that typically trades in contango. This recent shift into backwardation, which first appeared around November 19, aligns with historical patterns where it marked major or local market lows, such as the $80,000 bottom on November 21. The structure suggests a significant amount of leverage has been flushed out of the system. However, the article cautions that backwardation in cash-settled CME futures does not automatically imply a bullish signal like it might for physical commodities, as it can reflect cautious forward pricing or deteriorating risk appetite. Nevertheless, this structure has repeatedly marked turning points once forced sellers are exhausted, placing Bitcoin in a zone historically associated with both danger and opportunity.
(Source：CoinDesk)