#terms

In crypto, there are two parallel markets for the same asset at once — the spot market (where assets are bought and sold “physically”) and the futures market (where contracts tied to the price in the future are traded).

When a divergence arises between them, a risk-controlled arbitrage strategy becomes possible.

▪️ Basis trade — a strategy in which a trader takes opposite positions on the spot and futures markets for the same asset, aiming to profit from the difference between the current and the expected price.

Strategy:

🟢 Buy BTC on the spot
🟢 Open a short of the same volume on the futures
🟢 Wait for expiration — the futures price “converges” with the real price
🟢 Earn from the convergence of prices without directional market risk

Although the strategy is relatively low-risk, there are certain nuances:

- Changes in funding can reduce profit
- Insufficient liquidity on one side
- The price gap can persist longer than expected
- Capital is “locked” in a neutral position

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Basis trade is not speculation, but a market-neutral strategy that generates profit from market inefficiency.