Basis markets in digital assets refer to the trading venues where the difference between the spot price of a cryptocurrency and its futures price is traded. This difference, known as the basis, represents the cost of carrying the underlying asset until the futures contract expiry. Participants engage in basis trading to profit from price discrepancies or to hedge existing spot positions. Understanding these markets is vital for sophisticated digital asset trading strategies.
Context
The state of basis markets often indicates prevailing market sentiment and liquidity conditions for a given digital asset. A key debate centers on the impact of perpetual futures contracts, which lack a fixed expiry, on traditional basis calculations. Watching for significant shifts in basis values can offer signals regarding investor expectations for future price movements and funding rates.
UK authorities are investigating Basis Markets for alleged cryptocurrency fraud involving $28 million, leading to arrests and a call for investor information.
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