The CME bitcoin annualized basis has slipped to -2.35%, marking the deepest stretch of backwardation since the extreme market distortions seen during the FTX collapse in November 2022, when the basis briefly plunged toward -50%, according to Velo.
Backwardation occurs when near-term futures trade above longer-dated contracts, implying the market expects bitcoin prices to weaken over time. This setup is rare for bitcoin, which typically trades in contango—a structure reflecting financing costs and persistent appetite for leveraged, forward-dated exposure.
The market first dipped back into backwardation around Nov. 19, just ahead of bitcoin’s recent local low near $80,000 on Nov. 21. The ongoing correction has flushed substantial leverage from the system, with traders closing long futures positions and institutions trimming exposure.
Past episodes of backwardation—spanning November 2022, March 2023, August 2023, and now November 2025—have tended to coincide with periods of stress or forced deleveraging and often lined up with notable market troughs.
Even so, backwardation should not be mistaken for a guaranteed bullish reversal. Unlike commodities such as oil, where backwardation typically signals tight supply, CME bitcoin futures are cash-settled and heavily utilized for basis trades. This allows the futures curve to sink further into negative territory without signaling immediate spot-market strength.
What backwardation does reflect is a cautious view of bitcoin’s forward pricing and moderated expectations from institutional traders. While much of the excess leverage has already been cleared, conditions can still deteriorate if sentiment weakens. Yet this same structure has repeatedly emerged near turning points when forced sellers have nearly exhausted themselves.
Bitcoin now sits at a juncture where elevated risk and potential upside coexist, mirroring the environment surrounding previous local bottoms.
