Glossary

Basis

Basis is the price difference between a futures contract and the spot price of the same asset.

Basis is the futures price minus the spot price of the same asset. Traders also express it as a percentage of the spot price. When the futures price is above spot, the basis is positive. When it is below spot, the basis is negative.

Dated futures converge to spot at expiry, so their basis shrinks toward zero as the expiry date comes closer. Analysts often annualize the basis to compare contracts that expire on different dates. Perpetual futures have no expiry. The funding rate keeps their price close to spot instead.

Basis reflects the cost of carrying a position and the demand for leveraged exposure. It does not show the direction of the next price move. A wide basis can come from strong demand for leveraged long positions or from the cost of funding. Read it together with funding rates and open interest.