What Are the Primary Drivers of the Basis between Perpetual Futures and Spot Prices?

The basis, or the difference between the futures and spot price, is primarily driven by market sentiment and supply-demand dynamics. A positive basis (contango) often indicates bullish sentiment, where more traders are willing to go long and pay a premium for leveraged exposure.

A negative basis (backwardation) suggests bearish sentiment, with a higher demand for short positions. Other factors include the cost of carry, interest rate differentials, and sudden shifts in market volatility that affect trader positioning.