Here is to another week in crypto, following an exceptionally strong performance for U.S.-based Bitcoin spot ETFs last week. Over the five trading sessions, these Bitcoin spot ETFs saw total net inflows of $1.829 billion. Last Tuesday was particularly notable, with the ETFs experiencing their second-best day since their launch on January 11, bringing in a net inflow of $887 million. This achievement has been widely celebrated within the crypto community.

However, there is speculation that the recent inflows into the U.S.-based Bitcoin spot ETFs might be driven by basis trading. Basis trading involves exploiting the price difference between a futures contract and the underlying asset. In the crypto market, traders execute this strategy by simultaneously buying the crypto asset in the spot market or through similar instruments like spot ETFs, and selling perpetual contracts to profit from the funding rate. This funding rate benefits shorts whenever it is positive, during which time longs pay shorts to maintain their positions. We will delve into this further later. For now, let us review the three most significant news items from the past week.