What Factors Can Cause Basis Risk to Increase in Cryptocurrency Futures Hedging? ▴ Learn

What Factors Can Cause Basis Risk to Increase in Cryptocurrency Futures Hedging?

Basis risk can increase due to several factors, including: differences between the specific spot exchange used by the hedger and the reference rate used by the futures exchange; sudden changes in market liquidity or volatility; and regulatory changes that affect one market but not the other. Also, a mismatch in contract size or expiration dates can contribute to basis volatility.

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