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Canadian Spot Bitcoin ETFs: A Comprehensive Guide to Investing in Bitcoin

Introduction To Spot Bitcoin ETFs in Canada

Investing in Bitcoin has become increasingly popular, but it can be challenging for Canadian investors to navigate the complexities of cryptocurrency exchanges and wallets. However, there is a solution: the Canadian Spot Bitcoin ETF. In this comprehensive guide, we will explore what a Bitcoin ETF is, how it works, and the top options available in Canada. 

Whether you’re a savvy investor looking for exposure to Bitcoin or a hands-off investor seeking diversification, this guide will help you make informed decisions.

Article Summary

  • What is a Bitcoin ETF?
  • List of Bitcoin ETFs in Canada
  • How Does a Bitcoin ETF Work?
  • Top Canadian Spot Bitcoin ETFs
  • How to Invest in a Bitcoin ETF in Canada
  • Is Investing in a Bitcoin ETF a Good Option?
  • Pros and Cons Of Investing in a Canadian Bitcoin ETF
  • Conclusion

What is a Bitcoin ETF?

A Bitcoin ETF, or exchange-traded fund, is a financial product that tracks the value of Bitcoin on a market exchange platform. Unlike buying Bitcoin directly, investing in a Bitcoin ETF allows you to gain exposure to Bitcoin without the need for a crypto exchange account. These ETFs trade on traditional stock exchanges, such as the New York Stock Exchange (NYSE) or the Toronto Stock Exchange (TSX), making it more accessible to a wider range of investors.

List of Bitcoin ETFs in Canada

Fund NameTicker SymbolTraded ExchangeBitcoin Holdings
Purpose Bitcoin ETFBTCCTSXPhysical Spot Btc
Evolve Bitcoin ETFEBITTSXPhysical Spot Btc
3iQ CoinShares Bitcoin ETFBTCQTSXPhysical Spot Btc
Fidelity Advantage Bitcoin ETFFBTCTSXPhysical Spot Btc
CI Galaxy Bitcoin ETFBTCXTSXPhysical Spot Btc
Purpose Bitcoin Yield ETFBTCYTSXCovered call

How Does a Bitcoin ETF Work?

When you invest in a Bitcoin ETF, the ETF provider uses your investment to purchase Bitcoin from a cryptocurrency market maker. 

The Bitcoin purchased is then securely stored in offline cold storage to ensure its safety. The ETF shares you purchase represent holdings in a specific amount of Bitcoin. 

As the price of Bitcoin fluctuates, the value of your ETF shares will also fluctuate accordingly. The goal of a Bitcoin ETF is to track the performance of Bitcoin, minus any fees.

It’s important to note that Bitcoin ETFs charge ongoing fees, such as management fees, administrative expenses, operational costs, and marketing fees. 

These fees are collectively known as the Management Expense Ratio (MER) and are deducted from your investment on an annual basis. 

Before investing in a Bitcoin ETF, it’s crucial to understand and evaluate the MER to ensure it aligns with your investment goals

1. Evolve Bitcoin ETF (EBIT)

  • Inception Date: February 19, 2021
  • Management Fee: 0.75%
  • Assets Under Management: $58.133 million
  • Eligible Accounts: TFSA, RRSP, personal and business taxable accounts
  • Cold Storage Wallet: 100%
  • Listing Currency: CAD & USD
  • Price Index: CME CF Bitcoin Reference Rate (BRR)

The Evolve Bitcoin ETF (EBIT) is designed to track the price movement of Bitcoin without any additional features or strategies. It offers a US dollar version account, allowing investors to use US dollars in their accounts. While EBIT has a relatively small asset size, it provides investors with exposure to Bitcoin and the potential for capital appreciation.

2. CI Galaxy Bitcoin ETF (BTCX)

  • Inception Date: March 5, 2021
  • Management Fee: 0.40%
  • Assets Under Management: $138 million
  • Eligible Accounts: RRSP, RRIF, TFSA, RESP, RDSP, DPSP, including personal and corporate non-registered accounts
  • Cold Wallet Storage: 100%
  • Listing Currency: CAD & USD

The CI Galaxy Bitcoin ETF (BTCX) aims to track the price movement of Bitcoin without any additional features. It is one of the largest Bitcoin ETFs in terms of assets under management and offers a US dollar version, allowing investors to diversify their currency exposure. With its low management fee, BTCX is an attractive option for investors looking for a cost-effective Bitcoin ETF.

3. Purpose Bitcoin ETF (BTCC)

  • Inception Date: February 18, 2021
  • Management Fee: 1.00%
  • Assets Under Management: $584.4 million
  • Cold Storage Wallet: 100%
  • Eligible Accounts: TFSA, RRSP, personal and corporate non-registered investment accounts
  • Listing Currency: CAD & USD

The Purpose Bitcoin ETF (BTCC) is known for its robust offering and various formats. It tracks the price of Bitcoin and comes in different versions, including US dollar, hedged Canadian dollar, unhedged Canadian dollar, and carbon offset. BTCC is one of the largest Bitcoin ETFs in Canada and provides investors with multiple options to suit their investment preferences.

4. 3iQ CoinShares Bitcoin ETF (BTCQ)

  • Inception Date: March 31, 2021
  • Management Fee: 1.00% (MER up to 1.33%)
  • Assets Under Management: $250 million
  • Cold Storage Wallet: 100%
  • Eligible Accounts: RRSP, RRIF, RDSP, DPSP, RESP, TFSA, including personal and corporate non-registered investment accounts
  • Listing Currency: CAD & USD

The 3iQ CoinShares Bitcoin ETF (BTCQ) is managed by one of the largest digital asset managers in Canada. While BTCQ has higher fees compared to other Bitcoin ETFs, it offers investors exposure to the price movement of Bitcoin. BTCQ provides Canadian investors with an option to add Bitcoin exposure to their US dollar portfolios.

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5. Fidelity Advantage Bitcoin ETF (FBTC)

  • Inception Date: November 30, 2021
  • Management Fee: 0.00%
  • Assets Under Management: $63.32 million
  • Cold Storage Wallet: 100%
  • Risk Rating: High
  • YTD Return: 59.97%

The Fidelity Advantage Bitcoin ETF (FBTC) is a relatively new entrant in the Canadian Bitcoin ETF market. It aims to track the price of Bitcoin without any management fees, making it an attractive option for cost-conscious investors. While FBTC is smaller in terms of assets under management, it provides investors with exposure to Bitcoin’s potential upside.

How to Invest in a Bitcoin ETF in Canada

Investing in a Bitcoin ETF in Canada is a straightforward process. Here are the steps to get started:

  1. Choose a brokerage: Select a brokerage that offers access to Bitcoin ETFs. Ensure that the brokerage is reputable, offers competitive fees, and provides the necessary account types (e.g., TFSA, RRSP) for your investment needs.
  2. Open an account: Follow the brokerage’s account opening process, which may involve providing personal information, completing documentation, and verifying your identity.
  3. Fund your account: Deposit funds into your brokerage account. Ensure that you have sufficient funds to invest in the Bitcoin ETF of your choice.
  4. Research and select a Bitcoin ETF: Conduct thorough research on the available Bitcoin ETF options. Consider factors such as management fees, assets under management, performance history, and the ETF’s investment strategy. Select the Bitcoin ETF that aligns with your investment goals.
  5. Place an order: Once you have chosen a Bitcoin ETF, place an order through your brokerage platform. Specify the number of ETF shares you wish to purchase and review the order details before confirming.
  6. Monitor and manage your investment: Keep track of your Bitcoin ETF investment and monitor its performance. Consider setting up alerts or notifications to stay informed about any significant price movements or news related to the ETF.

Is Investing in a Bitcoin ETF a Good Option?

Investing in a Bitcoin ETF can be an attractive option for Canadian investors seeking exposure to Bitcoin. 

It provides a regulated and transparent way to invest in Bitcoin without the complexities of managing a crypto exchange account. However, it’s essential to consider the following factors:

  • Volatility: Bitcoin is known for its price volatility, and Bitcoin ETFs can experience similar fluctuations. Investors should be prepared for potential price swings and carefully assess their risk tolerance.
  • Fees: Bitcoin ETFs charge management fees, which can impact long-term returns. It’s crucial to evaluate the MER and compare it with other investment options to ensure it aligns with your investment goals.
  • Diversification: Bitcoin ETFs can offer diversification benefits to a portfolio, especially for investors seeking exposure to the cryptocurrency market. However, it’s essential to consider the overall asset allocation and diversification strategy of your investment portfolio.
  • Regulatory Landscape: The regulatory environment surrounding Bitcoin and cryptocurrencies is continually evolving. Stay informed about any regulatory changes or developments that may impact the Bitcoin ETF market in Canada.
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Pros and Cons Of Investing in a Canadian Bitcoin ETF

Investing in a Canadian Bitcoin ETF can offer several advantages and disadvantages. Here are some pros and cons to consider:

Pros:

  1. Accessibility: Investing in a Bitcoin ETF provides an easy and convenient way for investors to gain exposure to Bitcoin without the need for wallets or technical know-how.
  2. Regulatory oversight: Canadian Bitcoin ETFs are regulated by authorities such as the Ontario Securities Commission, providing investors with a level of protection and oversight.
  3. Diversification: ETFs typically hold a basket of assets, providing investors with diversification across various cryptocurrencies and reducing risk.
  4. Liquidity: ETFs are traded on stock exchanges, providing investors with easy entry and exit options, along with high liquidity.

Cons:

  1. Volatility: Bitcoin is known for its price volatility, and investing in a Bitcoin ETF exposes investors to these price fluctuations.
  2. Counterparty risk: ETFs rely on fund managers and custodians to manage the underlying assets. There is a risk of fraud, mismanagement, or security breaches that could impact investors.
  3. Fees: ETFs often charge management fees, which can eat into potential returns over time.
  4. Lack of control: By investing in an ETF, investors give up direct ownership and control over their Bitcoin holdings, as the fund manager makes investment decisions on their behalf.

It is important to conduct thorough research, consider your risk appetite, investment goals, and consult with a financial advisor before making any investment decisions.

Conclusion

Investing in a Canadian Spot Bitcoin ETF provides a convenient and regulated way to gain exposure to Bitcoin. By selecting the right Bitcoin ETF, investors can participate in potential price appreciation without the complexities of buying and storing Bitcoin directly. 

However, it’s crucial to conduct thorough research, assess the fees and risks involved, and align your investment strategy with your financial goals. Remember to consult with a professional advisor to ensure your investment decisions align with your individual circumstances and risk tolerance.

Disclaimer: The information provided in this article is for educational purposes only and should not be considered as financial advice. Please consult with a professional advisor before making any investment decisions.

About This Article

Author: Mark Prosz

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