Basis Trade
A delta-neutral strategy that profits from the spread between a spot position and its corresponding futures or perpetual contract.
A basis trade (or cash-and-carry trade) involves simultaneously holding a long spot position in an asset and a short position in the corresponding futures or perpetual futures contract. Because the perpetual must periodically rebalance its price toward spot via the funding rate, traders who are long spot and short the perpetual collect the funding rate from the net-long side of the market — without taking directional price exposure.
In crypto, the basis trade is particularly attractive during bull markets when funding rates run persistently positive (2–5% per month annualised during sustained uptrends). A trader holding long BTC spot and short BTC perpetual earns the funding rate while being market-neutral. The yield varies with market sentiment, making basis trading returns variable and opportunistic rather than fixed.
Risks include: exchange counterparty risk (the short leg is on a CEX or DEX that could be hacked or fail), collateral liquidation risk if the perpetual position is under-margined during extreme moves, and the basis collapsing or going negative (making the trade unprofitable). Sophisticated funds run systematic basis strategies at scale across multiple exchanges.