GlossaryAdvanced
Contango
A market condition where a futures contract trades above the current spot price, commonly reflecting the cost of holding a position until expiry.
Contango describes a market condition where a futures contract trades above the current spot price of its underlying asset, with contracts further from expiry generally trading at progressively higher prices than those closer to it.
In crypto specifically, a market in contango is commonly associated with bullish or neutral sentiment and active demand for leveraged long exposure, and is the condition a cash-and-carry trade (see Kaavon's "Cash-and-Carry Trade" glossary definition) is specifically designed to capture by selling the richer futures price against spot.
Examples
- A futures contract trading noticeably above spot price is a market in contango, the condition a cash-and-carry trade is designed to profit from.
- Persistent contango across dated futures contracts is commonly read as a sign of sustained demand for leveraged long exposure.