DERIV Derivatives · Updated March 2026 · ~4 min · For TradingView desktop 3.2.1
Reading the Crypto Futures Term Structure
Connect the futures prices of different expiries for one instrument into a curve — that's the term structure. Its shape reveals the market's aggregate view of the future.
Two shapes
- Contango (premium, upward curve): far months dearer than near. Common in normal/bullish crypto, reflecting long sentiment and carry cost; steep contango = crowded leveraged longs;
- Backwardation (discount, downward curve): near months dearer than far. Appears in panic selling or spot tightness — the market is desperate to sell/buy now; extreme backwardation often marks local bottoms.
How to use it
The curve flattening from steep contango, or flipping to backwardation: leveraged longs are ebbing, risk appetite falling; repairing from deep backwardation: panic easing. It's a structural sentiment read, more complete than one basis number.
Tip: term structure and cash-and-carry are two sides of a coin — steep contango is exactly the carry opportunity. Pair with the long/short ratio for crowding.