Year-to-date CME bitcoin is down -2.35%, its deepest retreat since the extreme swings of the FTX collapse in November 2022, when the base briefly approached -50%, according to Velo data.
Backwardation describes a futures curve where contracts that expire earlier trade at a higher price than contracts that expire later. In other words, the market prices bitcoin in the future at a lower level than the current or nearby price. This creates a downward trending futures curve and signals that traders expect weaker prices as time goes on.
This structure is typically unusual in bitcoin because bitcoin futures almost always trade at a premium, known as contango, reflecting the cost of leverage and strong demand for forward exposure.
The recent pullback first flashed around November 19th, just two days before bitcoin bottomed out around $80,000 on November 21st. In this recent correction, a significant amount of leverage has been flushed out of the system, with traders exiting long futures and institutions reducing exposure.
Retracements have historically occurred during moments of stress or forced risk relief, and previous episodes in November 2022, March 2023, August 2023 and now November 2025 were closely aligned with major or local lows in the market.
However, reverse does not automatically imply a bullish bend. As highlighted in previous CoinDesk research, bitcoin is not comparable to physical commodities like oil, where pullbacks reflect tight supply. CME futures are cash-settled, are heavily used by institutions that conduct basis trades, and can slide deeper into negative territory.
In this view, the pullback represents cautious pricing and weaker expectations rather than strengthening spot demand in the short term.
A large part of the leverage has already evaporated, but conditions can always worsen if risk appetite worsens further. At the same time, this is the same structure that has repeatedly marked turning points when forced sellers have exhausted themselves. Bitcoin is therefore entering a zone where both danger and opportunity have historically appeared.
