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Best Bitcoin ETFs In 2021: A Stress-Free Way to Buy Cryptocurrency In Canada

Best Bitcoin ETFs In 2021: A Stress-Free Way to Buy Cryptocurrency In Canada

If you’re interested in buying cryptocurrency, there are a few ways to do it. One of the easiest is to open an account with a cryptocurrency exchange, like Bitbuy or Coinsmart. But what if you just want to add a little Bitcoin to your investment portfolio. Did you know that you can now buy Bitcoin ETFs in the same online brokerage account where you trade stocks and bonds, ETFs, and mutual funds? To help, I’ve come up with a list of top Bitcoin ETFs in Canada that you can buy today.

How Do ETFs Work?

An ETF is short for Exchange Traded Fund. Due to their passive management style, ETFs give investors a diversified portfolio of stocks and bonds at a very low cost. Because ETF managers are simply trying to replicate the performance of an underlying market index rather than outperform it, the operating costs of an ETF are kept low, and the fund passes the savings along to investors.

Unlike mutual funds, ETFs trade like individual stocks; they can be bought and sold instantly while the markets are open. For example, actively traded mutual funds often have MERs above 2%, while many broad market ETFs have MERs below .10%.

Best Bitcoin ETFs In Canada for 2021

1. Purpose Bitcoin ETF (BTCC)

Purpose Bitcoin ETF was the world’s first Bitcoin exchange-traded fund. BTCC trades on the Toronto Stock Exchange under three separate ticker symbols – BTCC (FX currency hedged), BTCC.B (non-FX currency-hedged), and BTCC.U(USD). The fund holds actual Bitcoin, which means that when you buy shares of BTCC, you are holding real Bitcoin. It is also TFSA and RRSP eligible.

BTCC At-A-Glance

Inception Date: Feb 2021

Ticker: BTCC

Exchange: TSX

Management Fee: 1.00%

Assets Under Management (AUM): $1.2B

Storage: 100% Cold Storage

RRSP Eligible: Yes

2. CI Galaxy Bitcoin ETF (BTCX)

Like the Purpose Bitcoin ETF, BTCX Bitcoin holdings are kept entirely offline, in cold storage. It has a lower management fee than the Purpose fund and is guaranteed by CI Investments not to exceed 0.95%. Although it launched shortly after BTCC (March 2021), it has far fewer assets under management at this point ($24M vs. 1.2B).

BTCX At-A-Glance

Inception Date: March 2021

Ticker: BTCX

Exchange: TSX

Management Fee: 0.40%

Assets Under Management (AUM): $24M

Storage: 100% Cold Storage

RRSP Eligible: Yes

3. Evolve Bitcoin ETF (EBIT)

Bitcoin ETFs haven’t been around long, and the Assets Under Management(AUM) sizes of different funds seem to correlate with their release date. Evolve Bitcoin ETF (EBIT) was the world’s second-ever crypto ETF, launching days after BTCC. EBIT has $67AUM and a management fee of .75%, higher than a broad-based ETF but much lower than most mutual funds.

EBIT At-A-Glance

Inception Date: Feb 2021

Ticker: EBIT

Exchange: TSX

Management Fee: 0.75%

Assets Under Management (AUM): $67M

Storage: 100% Cold Storage

RRSP Eligible: Yes

4. 3iQ CoinShares Bitcoin ETF (BTCQ)

BTCQ caps their MER at 1.25%, slightly lower than the cap set by BTCC. Like the Purpose fund, it has high assets under management (approx $800 million). Not surprising, given that it’s managed by two of the world’s largest digital asset managers (3iQ and CoinShares).

BTCQ At-A-Glance

Inception Date: Mar 2021

Ticker: BTCQ

Exchange: TSX

Management Fee: 1.00%

Assets Under Management (AUM): $781M

Storage: 100% Cold Storage

RRSP Eligible: Yes

5. Ninepoint Bitcoin ETF (BICT)

BICT began as a closed-ended fund but was converted to a Bitcoin exchange-traded fund in May of 2021. Ninepoint uses its management fee to cover the cost of the carbon offset of the Bitcoin it holds, allowing them to make a claim of being an environmentally friendly ETF, something that will be of interest to some investors.

BICT At-A-Glance

Inception Date: May 2021

Ticker: BICT

Exchange: TSX

Management Fee: 0.70%

Assets Under Management (AUM): $64M

Storage: 100% Cold Storage

RRSP Eligible: Yes

Advantages and Disadvantages of Bitcoin ETFs

Buying Bitcoin through an ETF has its advantages, as some drawbacks, depending on what you want to accomplish by trading Bitcoin. Before you decide to purchase a Bitcoin ETF, here are some things to consider.

Bitcoin ETF Pros

1. It’s easy. When you buy Bitcoin in an ETF, you don’t need to worry about opening an account with a Bitcoin exchange or storing Bitcoin keys and digital wallets. You can manage everything inside the same discount brokerage account that you use to buy and sell stocks.

2. It’s secure. Bitcoin ETFs store their holdings offline, in cold storage. This ensures that ETF funds are safe from hackers.

3. Bitcoin ETFs are RRSP-eligible. You can buy Bitcoin ETFs inside a registered investment account, like an RRSP or TFSA. This way, you can include Bitcoin in your long-term investment strategy. Just make sure it doesn’t comprise too large a portion of your overall investment.

Bitcoin ETF Cons

1. Bitcoin is risky, even inside an ETF. Often, people consider pooled funds like mutual funds and ETFs to be lower risk because they are diversified investments. But Bitcoin is not the same as stock – it remains highly speculative, and its future is unclear. Even inside an ETF, you should only consider buying Bitcoin in amounts you can afford to lose.

2. Bitcoin ETFs charge MERs. While the management fees of a Bitcoin exchange-traded fund are reasonable, it’s an extra cost that you wouldn’t incur if you were to purchase individual Bitcoin through a cryptocurrency exchange or by other means.

3. Bitcoin ETF transactions aren’t decentralized. Because Bitcoin ETFs are managed like any other mainstream investment vehicle, you lose the advantage of transactions occurring on a decentralized system. Also, you can’t directly exchange your Bitcoin for another type of cryptocurrency. It can only be redeemed as fiat currency (Canadian dollars).

Where to Buy Bitcoin ETFs

The best way to buy Bitcoin ETFs, or any ETF for that matter, is through an online broker that offers free ETF purchases. Three come to mind: Questrade, Wealthsimple Trade, and Virtual Brokers. Questrade is our top-rated online broker here at MapleMoney, with hundreds of free ETFs available for purchase.

The same goes for Wealthsimple Trade, which is an easy-to-use, mobile-only trading platform. And Virtual Brokers enables free ETF purchases, along with multiple trading platforms for advanced traders. So, you can trade Bitcoin ETFs and trade options with ease, all at the same time.

Of course, you can purchase Bitcoin ETFs with any online broker, but if they charge you for ETF purchases, the fees will end up having a negative impact on your overall returns, something you want to avoid.

Final Thoughts on Bitcoin ETFs

In the coming years, we will see several new cryptocurrency ETFs enter the market. In fact, there are ETFs dedicated specifically to another popular coin, Ethereum. If you want to buy Bitcoin, and you don’t mind doing it through the Toronto Stock Exchange, then a Bitcoin ETF might be the way to go. Just remember to manage your risk. A Bitcoin ETF is still Bitcoin, and crypto remains a highly speculative investment.

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