Spot-Perpetual Basis

The spot-perpetual basis is the price difference between the spot market price of an asset and the price of its perpetual futures contract. This basis is driven by the cost of carry, market sentiment, and funding rate dynamics.

When the basis is positive, it indicates bullish sentiment and that long positions are paying a premium to maintain their leverage. Conversely, a negative basis suggests bearish sentiment.

Arbitrageurs trade the basis to profit from the spread, which keeps the perpetual price anchored to the spot price over the long term. Understanding the basis is crucial for traders looking to hedge positions or capture yield.

It is a primary indicator of market leverage and sentiment.