Member-only story
Backwardation Is a Godsend For Speculators and a Curse for Miners
Today Bitcoin Went Into Solid Backwardation
As we sift through the latest exchange and crypto token crisis, today bitcoin futures went into solid backwardation. This is a godsend for speculators and a genuine headache for bitcoin miners.
Let me first direct you to an article I wrote in June 2019 when the opposite was happening.
Basis is a fundamental market phenomenon, not technical, and presents amazing market opportunities. Put simply contango is when futures trade over the spot market and backwardation is when futures trade below the spot market.
As a rule of thumb, contango widens as bitcoin market tops are being made, and backwardation occurs as bitcoin market bottoms are formed. That said, neither contango nor backwardation are timing indicators. Just as markets in contango can go into a wider contango, markets in…
