Basis (futures basis)

Basis measures the raw price gap between a perpetual future's own trading price and the current spot price of the underlying coin, expressed in basis points (hundredths of a percentage point) so gaps of very different magnitudes across coins and price levels can be compared on the same scale. A positive basis means the perp trades above spot; a negative basis means it trades below. It's a snapshot price relationship, not a payment; the payment mechanism built to correct it is funding rate.

Basis and funding move together for a mechanical reason: a wide positive basis is precisely what a positive funding rate exists to close, by charging longs and paying shorts until enough leveraged demand shifts to pull the perp's price back toward spot. Reading them side by side tells you more than either alone. A wide basis with funding that hasn't caught up yet suggests the correction is still ahead; a basis that's already narrowed while funding stays elevated suggests the mechanism has mostly done its job and the crowded positioning driving the earlier gap may be starting to unwind.

Futures basis is a different concept from a basis point, the unit it happens to be measured in; a basis point is simply one hundredth of a percentage point, the same unit used everywhere from bond yields to interest-rate changes, and confusing the two is a common mix-up. Basis also doesn't tell you why the gap opened, whether from genuine leveraged demand, thin liquidity making the perp easy to push around, or a temporary dislocation around a news event. And a wide basis has no fixed timeline for narrowing; like funding, it can persist for extended stretches without correcting, especially in a strongly trending market.

Bitcoin's spot price sits at $114,000 while its perpetual trades at $114,570, a basis of roughly 50 basis points (0.5%) above spot, on the wide side for Bitcoin, which typically runs closer to 10-20 basis points in calm conditions. That elevated basis lines up with the funding rate running well above its usual range at the same time, both pointing to the same underlying story: leveraged long demand has pushed the perp meaningfully ahead of spot, and funding payments are actively working to pull the two back together.