Futures premium, also known as contango, occurs when the price of a futures contract for an asset is higher than its current spot market price. This situation indicates that market participants anticipate the asset’s price will rise in the future or are willing to pay a premium for future delivery. It is a common phenomenon in commodity and financial markets, including those for cryptocurrencies. A persistent premium can signal bullish sentiment.
Context
Futures premium is a frequently reported metric in crypto news, especially when discussing market sentiment and derivatives trading activity. Analysts often examine the futures premium to gauge the bullish or bearish outlook of institutional and sophisticated investors. A high or increasing premium can suggest strong buying pressure and positive expectations for future digital asset prices.
The futures market just flushed out all excessive leverage, signaling that short-term speculators have been removed and a potential price floor is in place.
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