How Can Institutional Traders Use Futures Contracts for ‘Basis Trading’ in Crypto?

Basis trading involves simultaneously taking a long position in the spot market and a short position in the futures market, or vice versa, to profit from the convergence of the two prices. Institutional traders use this to lock in the 'basis' (the difference between the spot and futures price) as profit, especially in a contango market.

This is a low-risk, market-neutral strategy that leverages large capital for small, consistent returns.