There’s no question that owning crypto assets, including Bitcoin, is hot with some investors. Any crypto assets however can be very volatile, fraught with uncertainty, and to be honest – they might not pan out at all long-term.
So, if you’re going to own Bitcoin, what are the Top Bitcoin ETFs in Canada?
Should you even bother owning Bitcoin or any crypto in your portfolio?
Read on for our take and thoughts in today’s post.
Why Crypto? Why Crypto ETFs?
There’s little doubt that digital currencies, the rise of cryptocurrencies including Bitcoin have been on a big upward trend in recent years.
One big thing that blockchain technology has triggered in recent years, is a wave of decentralized financial assets, including cryptocurrency or cryptos for short. Many existing digital currency enthusiasts believe these assets including Bitcoin could make themselves rich – otherwise, why invest in them right? Others still, including those that have not yet invested in any digital currency or Bitcoin may be asking themselves is there a reason to invest at all?
In no particular order, these could be some reasons to invest in cryptocurrency including Bitcoin:
- Cryptos are born from a relatively new, disruptive technology (blockchain) that has the potential to change what and how people hold asset value over time.
- Cryptocurrencies can be, for the most part, maybe, a safe way to store value since they are not an easy asset to steal – several complex security protocols are involved to hack or steal the asset.
- Cryptocurrencies offer, at this point, a low correlation to traditional assets like stocks, bonds and cash. So, it can offer some investors some perceived level of diversification beyond traditional asset classes.
- Given this new type of asset is highly speculative, and because risk and reward are related, then an investor may yield large gains if the crypto asset(s) they own increase significantly in value.
That’s a big IF over time.
Then again, any disruptive technology or new entity always started small….
Cryptocurrencies are therefore not unique in being subject to speculative manias – they are just the latest asset to generate it. Any wise investor has seen this drill before, look no further than the following assets for some levels of irrational exuberance:
- Remember cannabis stocks a few years ago, or now still?
- Remember the tech boom (then crash), then boom again in recent years?
- What about the various real estate crashes and emerging bubbles over the decades?
For anyone paying close attention to market history, this time, it’s not different. History may not repeat per se but it does rhyme.
Further Reading: The Four Keys to Investing Success.
But speculative behaviour need not be limited to just picking a few crypto assets and hoping for the best. Given one of the most important factors of investing is not to get caught up in the short-term price movements of individual assets, investors might want to consider “playing” crypto via Exchange Traded Funds (ETFs). While most ETFs track an index or a basket of assets, a cryptocurrency ETF tracks the price of one or more digital tokens. Based on investor’s sales or purchases, the share price of cryptocurrency ETFs fluctuates on a daily basis. Just like common stocks, they are also traded on a daily basis. By owning a crypto ETF, you might also be able to take advantage of many benefits.
The Benefits of Crypto ETFs
Given cryptocurrency ETFs are a nascent asset class (i.e., their value is tough and still being defined), let’s further unpack why crypto ETFs might be better than holding individual cryptos like Bitcoin themselves:
- You get exposure to one or more cryptos / collection of cryptocurrencies without the additional expenses of ownership. Ownership of cryptocurrencies can entail many additional expenses. You’ve got some custody charges; worries about digital wallets and more. Direct cryptocurrency ownership can also come with network fees. You can bypass a lot of these individual charges or hidden expenses by buying an ETF.
- Things could take off – it can be simplified but remain an affordable way to own a volatile asset class in one easy package.
- Cryptocurrencies have been hacked (sometimes repeatedly) since they were launched, leading to a big question over the security of this asset class. Ensuring security for cryptocurrencies can be a tall order from individual investors, who may not be familiar with any need to do so. A cryptocurrency ETF essentially outsources security functions to the providers of these ETFs.
- Last but not least, let’s face it, with the number of cryptocurrencies approaching the thousands – how do you choose a winner? An ETF that holds more or more cryptos might be a better bet.
Top Bitcoin ETFs in Canada
Over the last year, the game has changed – there has been a launch of several Bitcoin ETFs in Canada which made investing in this asset class much easier.
Without further ado, here are what we consider some of the best crypto ETFs to own in Canada and why – before our take, if you should even own this asset at all for your portfolio!
1. Purpose Bitcoin ETF
Fast facts about the Purpose Bitcoin ETF are found here.
The Purpose Bitcoin ETF (BTCC, BTCC.U (in U.S. dollars), BTCC.B (non-FX-hedged) claims fame to be the world’s first Bitcoin ETF. If you want to own Bitcoin without really holding Bitcoin, this is a leading contender. No digital wallet to worry about. Management Expense Ratio (MER) is modest at 1.00%. Want to use your TFSA or RRSP and save on tax? The Purpose Bitcoin ETF is eligible for registered accounts too.
2. CI Galaxy Bitcoin ETF
Fast facts about the CI Galaxy Bitcoin ETF are found here.
Using tickers BTCX.B, BTCX.U (in U.S. dollars), and for a low-cost fee of just 0.40% MER, the CI Galaxy Bitcoin ETF (BTCX) provides you with exposure to Bitcoin and is currently the best cryptocurrency ETF if you are looking for the lowest management fee. We also like the fact that this fund can be owned in a registered or non-registered investment account.
3. Evolve Bitcoin ETF
Fast facts about the Evolve Bitcoin ETF are found here.
If you own EBIT, EBIT.U (in U.S. dollars), it provides investors with yet another simple and efficient way to access the price of bitcoin through a secure investment solution. The benefits of EBIT include an easy way to trade/own Bitcoin in your TFSA or RRSP. The MER is modest: 0.75%.
4. 3iQ CoinShares Bitcoin ETF
Fast facts about the 3iQ CoinShares Bitcoin ETF are found here.
The 3iQ CoinShares Bitcoin ETF (BTCQ, BTCQ.U (in U.S. dollars)) is a Bitcoin ETF offered by 3iQ Digital Asset Management in partnership with CoinShares. The fund charges the same management fees as BTCC (1.00%) but unlike Purpose it is capped at 1.25%. As per the site:
“3iQ intends to absorb any expenses in excess of 0.25% such that the fund’s MER* will not exceed 1.25%. If the MER falls below 1.25%, the savings will be passed along to the fund.”
Nice. You can also buy the fund in both registered and non-registered accounts.
Now the $64,000 question, because that’s what Bitcoin is worth at the time of this post…
Should you even bother owning Bitcoin or any crypto in your portfolio?
As DIY investors at Cashflows & Portfolios, and long-time dividend stock investors AND buy and hold ETF owners in some of these funds, we must say, one of the most impressive and unique aspects of cryptocurrency is also a risk: since cryptocurrency and Bitcoin does not rely on any regulatory oversight, the biggest opportunity for gains is also a huge opportunity for risk.
Check out this quick but snappy video of what investing legend John Bogle thought of cryptos including Bitcoin before his passing:
“Avoid Bitcoin like the plague” – John Bogle.
Humm, not very compelling from one of the world’s most revered investors and pioneers of DIY investing – the Founder of Vanguard.
Top Bitcoin ETFs in Canada summary
What do we think?
Well, one of the founders (Joe) is dabbling a bit in Bitcoin via his free Wealth Simple account. Mark (the other owner of this site) does not own any cryptocurrencies at the time of this post.
So, while cryptocurrency ETFs and Bitcoin ETFs in Canada may reduce many of the challenges and concerns you would encounter in trying to own individual cryptocurrency assets, what we do agree on is, this new asset class is not without some investing risk.
As such, consider any investing in Bitcoin, Bitcoin ETFs or any cryptocurrency ETFs in Canada as more speculation at this point. Beyond that, unless it’s some of our favourite low-cost ETFs like these ones to build wealth, consider adopting My Own Advisor’s rule whereby try and limit any one stock or individual asset in your portfolio to just 5% of your overall portfolio value. You can read about this risk mitigation rule and other questions asked by his readers on his thoughtful FAQs page here.
In closing, as DIY investors for decades now, we’ll continue with our individual paths that marry a combination of mainly individual stocks, low-cost ETFs, and where it might make some sense – some alternative investments for any growth.
At Cashflows & Portfolios, even though our investment plans are similar many of our holdings are actually very different. So, we encourage you to determine an investing approach that matches your tolerance for risk, that aligns with your behavioural temperament, and that helps you reach the financial objectives you’re working so hard for.
We look forward to sharing more detailed posts and financial wealth-building articles with you!
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