Basis Trading
Strategy profiting from the difference between spot and futures price — low risk.
Basis trading (cash-and-carry trade) is a strategy generating profit from the difference (basis) between spot price and futures/perpetual price of a cryptocurrency.
How it works:
•Buy spot BTC (long)
•Short BTC futures/perp (short)
•Net position: delta-neutral (independent of price direction)
•Profit: collect funding rate (while positive) or wait for spot-futures convergence
Funding rate strategy:
•In bull market perp price > spot price → funding rate positive
•Shorts receive funding from longs
•Yield: 10-30% annually in peak bull market
Futures convergence:
•Quarterly futures trade at premium in bull market
•At expiry: price converges to spot
•Profit = premium minus holding costs
Risks:
•Funding rate can turn negative (short pays long)
•Exchange risk (FTX collapse wiped out many basis traders)
•Liquidation risk on futures short leg
•Margin requirements must be met
Where: Binance, OKX (spot + perp), Deribit (quarterly futures)
Who does it: Sophisticated investors, hedge funds, "delta-neutral" quant funds.