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What Is Basis Risk in a Cryptocurrency Futures Hedge?

The risk that the futures price and the underlying spot price do not move in perfect correlation, leading to an imperfect hedge.
Greeks.Live18.11.25

What Is Basis Risk in a Cryptocurrency Futures Hedge?

Basis risk is the risk that the price of the futures contract does not move in perfect correlation with the price of the underlying cryptocurrency being hedged. In a mining context, if the spot price of the mined coin drops but the futures price does not drop proportionally, the short futures hedge will not fully cover the loss in the value of the mined coins.

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