Investing in Bitcoin through an ETF offers several advantages, especially amid market volatility. While Bitcoin faced significant selling pressure in 2022, its current price presents a more attractive entry point compared to earlier peaks. Below, we explore the top Bitcoin ETFs available in Canada and the benefits of cryptocurrency investment via ETFs.
The Investment Case for Bitcoin
Bitcoin operates uniquely as a non-dividend-paying asset, relying solely on price appreciation driven by supply and demand dynamics.
Supply of Bitcoin
Bitcoin’s finite supply—capped at 21 million units—makes it increasingly scarce as mining progresses. Scarcity typically supports price growth, assuming sustained utility.
Demand for Bitcoin
Demand hinges on Bitcoin’s utility, including:
- Global transactions: Facilitates seamless cross-border payments.
- Privacy: Offers user anonymity.
- Decentralization: Independent of central banks.
- Irreversibility: Ensures secure transactions.
Countries like El Salvador and the Central African Republic have adopted Bitcoin as legal tender, signaling growing acceptance. However, its volatility may limit its role as a stable currency alternative.
Pros and Cons of Bitcoin ETFs
Pros
- Tax efficiency: Hold in TFSA/RRSP for tax-deferred growth.
- Convenience: Avoid wallet management (e.g., password recovery).
- Liquidity: Trade like stocks within a diversified portfolio.
Cons
- Fees: Management costs and bid-ask spreads.
- Indirect ownership: Lacks benefits like direct control/privacy.
How Bitcoin ETFs Store Bitcoin
Most ETFs use cold storage (offline wallets) to safeguard assets from cyber threats. Examples include:
👉 Explore secure Bitcoin storage solutions
Top 7 Bitcoin ETFs in Canada
1. CI Galaxy Bitcoin ETF (BTCX-B.TO)
- AUM: $224.3M | MER: 0.85%
- Cold Storage: Yes
- Lowest-cost option, tracking Bitcoin’s price closely.
2. Fidelity Advantage Bitcoin ETF (FBTC.TO)
- AUM: $97.42M | MER: 0.96%
- US dollar version available (FBTC.U.TO).
3. 3iQ CoinShares Bitcoin ETF (BTCQ.TO)
- AUM: $128.98M | MER: 1.25%
- Largest digital asset manager in Canada.
4. Purpose Bitcoin Yield ETF (BTCY-B.TO)
- Monthly distributions (8.85% yield) via covered calls.
- AUM: $37.33M | MER: 1.28%
5. Purpose Bitcoin ETF (BTCC-B.TO)
- AUM: $947.27M | MER: 1.49%
- Carbon-offset series for ESG-focused investors.
6. Ninepoint Bitcoin ETF (BITC.TO)
- AUM: $19.4M | MER: 1.45%
- Carbon emission offsets included.
7. Evolve Bitcoin ETF (EBIT.TO)
- AUM: $61.69M | MER: 1.82%
- Highest fees but solid tracking performance.
Are Bitcoin ETFs Worth the Fees?
- Tax-advantaged accounts (TFSA/RRSP): Yes, for tax-free growth.
- Non-registered accounts: Direct wallet purchases may be cheaper.
Should You Invest in Bitcoin ETFs?
Bitcoin suits investors who:
- Tolerate high risk.
- Allocate sparingly (5–10% of portfolio).
- Seek growth, not income.
Diversify wisely: Balance with equities, bonds, and alternatives.
FAQ
1. What’s the safest Bitcoin ETF in Canada?
CI Galaxy Bitcoin ETF (BTCX-B.TO) offers low fees and cold storage security.
2. Can I earn income from Bitcoin ETFs?
Purpose Bitcoin Yield ETF (BTCY-B.TO) provides monthly distributions.
3. How do Bitcoin ETFs handle storage?
Most use cold storage (offline wallets) for enhanced security.
4. Are Bitcoin ETFs taxable?
In TFSAs/RRSPs, gains grow tax-free. In non-registered accounts, capital gains apply.
5. Which ETF has the lowest fees?
CI Galaxy Bitcoin ETF (BTCX-B.TO) at 0.85% MER.
Conclusion
Bitcoin ETFs offer a regulated, tax-efficient entry into cryptocurrency markets. Prioritize low-cost options like BTCX-B.TO and maintain a diversified portfolio.
For further insights, check out the best Bitcoin stocks in Canada.
Final Rating: 9.5/10