Backwardation is the opposite of contango: a futures contract costs less than the coin on the spot market, and later dates are cheaper still.
In crypto it is unusual. It tends to appear after sharp crashes, when traders rush to short or hedge with futures and few want to bet on a rebound. In perpetual futures it shows up as a negative funding rate, where shorts pay longs.
Because it means pessimism is already crowded, some traders read long stretches of backwardation as a sign the selling is nearly done. It is not a reliable signal on its own.
Example
After a crash, Bitcoin trades at $80,000 while the futures contract expiring next month trades at $79,500. Futures are below spot: the market is in backwardation.