Crypto basis trading became significantly more popular after the launch of spot Bitcoin ETFs in early 2024. Since then, many traders started exploring price differences between spot ETFs and major futures markets such as the CME Bitcoin Futures.

Bitcoin basis trading example

Bitcoin basis traders look for price differences between the spot market (where BTC is traded instantly) and futures contracts (which track the cryptocurrency’s future prices).

For example, if BTC is trading at $80,000 in the spot market, but futures contracts for delivery in three months are priced at $82,000, Alice could buy bitcoin on the spot market while selling the same amount of BTC in the futures market.

Spot price: $80,000 per BTC.

Futures price: $82,000 per BTC for delivery in 3 months.

Basis: $2,000.

Rationale: Alice believes this $2,000 gap (basis) will shrink over the next few weeks due to increasing spot demand or decreasing futures premium.

Strategy: Alice executes a cash-and-carry arbitrage, buying BTC in the spot market for $80,000 and selling a BTC futures contract for $82,000.

Outcome: If the prices converge as expected, Alice uses the $BTC BTC bought in the spot market to fulfill the futures contract, effectively locking a $2,000 profit per BTC minus fees and operational costs.

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