What Factors Typically Cause the Basis to Fluctuate in Financial Derivatives Markets?

Basis fluctuation is primarily driven by changes in the supply and demand dynamics of both the spot market and the futures market. Factors include interest rates (cost of carry), storage costs (less relevant for cash-settled crypto), and market expectations about future price movements.

Sudden news events, changes in market sentiment, or unexpected shifts in the underlying asset's availability can also cause the spot and futures prices to diverge temporarily.