The CME bitcoin annualized basis has slipped to -2.35%, marking the deepest backwardation since the extreme dislocations surrounding the FTX collapse in November 2022, when the basis briefly plunged toward -50%, according to Velo data.

Backwardation occurs when near-dated bitcoin futures trade above longer-dated contracts, implying the market expects lower prices over time. This downward-sloping curve is atypical for bitcoin, which usually trades in contango as futures command a premium due to leverage costs and persistent demand for forward exposure.

The return to backwardation first appeared around Nov. 19, just two days before bitcoin found a local bottom near $80,000 on Nov. 21. The recent downswing has flushed significant leverage from the system, with traders closing long futures and institutions scaling back exposure.

Historically, backwardation tends to emerge during periods of stress or forced de-risking — with earlier instances in November 2022, March 2023, August 2023, and now November 2025 aligning closely with major or local market lows.

Still, backwardation does not guarantee a bullish reversal. Unlike physical commodities such as oil, where backwardation reflects real supply tightness, CME bitcoin futures are cash-settled and widely used for basis trading. As a result, the curve can drift deeper into negative territory without signaling strong spot market demand.

The latest shift therefore reflects more cautious forward pricing and softer expectations rather than immediate bullish pressure. While a substantial portion of leverage has already been cleared, conditions could worsen if risk appetite continues to decline. Yet this same futures structure has repeatedly accompanied turning points once forced selling runs its course.

Bitcoin now sits in a zone where risk and opportunity historically converge.