Why Is Basis Trading Considered a ‘Market-Neutral’ Strategy?

Basis trading is market-neutral because the trader takes offsetting positions in the spot and futures markets (e.g. long spot and short futures). Any profit or loss from the movement of the spot price is theoretically offset by an equal and opposite profit or loss from the futures contract.

The overall P&L of the combined position is primarily determined by the convergence of the basis, which is independent of the underlying asset's direction.