Basis is the spread between a derivative and the spot price of the thing it tracks. For a perpetual it is closely related to funding - funding exists to compress basis - but basis moves continuously while funding settles on a schedule, so it often turns first.
What it says
A perp trading persistently above spot means traders want leveraged long exposure badly enough to pay a premium for it. That is demand for leverage, not demand for the asset, and the two are not the same thing. A market can rally on spot buying with flat basis, and that is a structurally healthier rally than one where basis is stretching.
Where dated futures exist you get a term structure as well, and the shape carries the same meaning it does in commodities: steep contango is enthusiasm with a horizon, backwardation is stress or an expected supply shock.
The unwind
The reason to watch basis is what happens when it collapses. Wide basis attracts arbitrage - buy spot, short the perp, collect the funding - and those positions are stable until they are not. A sharp move that forces the short leg to be covered unwinds the spot leg too, which is why basis compression and liquidation cascades so often arrive together.
Read alongside funding and open interest, basis completes the leverage picture: how much is on, who is paying for it, and how expensive it is to keep.