Basis measures the gap between the price of a futures contract and the spot price of the same asset. When futures trade above spot, the basis is positive, a condition often called contango; when futures trade below spot, the basis is negative, sometimes called backwardation.
For dated futures, the basis tends to converge to zero as the contract approaches expiry, since the contract must settle at the spot price. For perpetuals, the funding rate plays a similar role in keeping the contract close to spot.
Basis is watched as a gauge of leverage demand and market sentiment. A wide positive basis can indicate strong appetite to hold long futures exposure. It is a descriptive measure of the spot-futures relationship rather than a directional prediction.