Best Bitcoin ETFs In Canada For January 2024 (2024)

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Best Bitcoin ETFs in Canada for January 2024

If the SEC’s approval has got you curious about adding Canadian Bitcoin ETFs to your investment portfolio, here are a few top performers you should consider:

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CI Galaxy Bitcoin ETF (BTCX.B.TO, BTCX.U.TO)

Best Bitcoin ETFs In Canada For January 2024 (1)

MER

0.80%

Assets Under Management

$517 million

Investing Strategy

Invests directly in Bitcoin

Best Bitcoin ETFs In Canada For January 2024 (2)

Assets Under Management

$517 million

Investing Strategy

Invests directly in Bitcoin

Why We Picked It

The CI Galaxy Bitcoin ETF trades in both CAD (BTCX.B.TO) and USD (BTCX.U.TO). It’s also one of the larger Bitcoin ETFs in Canada in terms of assets under management and is one of the best performing. Year-to-Date returns clocked in at 146.8% as of January 12, 2024. Meanwhile, the management expense ratio (MER) is 0.80% with a 0.40% management fee, which places this as one of the cheaper Bitcoin ETFs in Canada.

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Fidelity Advantage Bitcoin ETF (FTBC)

Best Bitcoin ETFs In Canada For January 2024 (3)

MER

0.95%

Assets Under Management

$194 million

Investing Strategy

Invests directly in Bitcoin

Best Bitcoin ETFs In Canada For January 2024 (4)

MER

0.95%

Assets Under Management

$194 million

Investing Strategy

Invests directly in Bitcoin

Why We Picked It

This ETF now has the lowest management fee for a Bitcoin ETF in Canada. This comes after Fidelity Canada ULC announced they’d be dropping the fee from 0.44% to 0.39%, in an effort to compete with the lower fees of U.S.-listed spot Bitcoin ETFs. However, while its performance over the course of the year is great, it’s not the best, with an annualized return of 127.7% as of January 12, 2024. It also has fewer assets under management than other Bitcoin ETFs listed in Canada.

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Purpose Bitcoin ETF (BTCC, BTCC.B, BTTC.J, BTCC.U)

Best Bitcoin ETFs In Canada For January 2024 (5)

MER

1.49%

Assets Under Management

$2 billion

Investing Strategy

Invests directly in Bitcoin

Best Bitcoin ETFs In Canada For January 2024 (6)

MER

1.49%

Assets Under Management

$2 billion

Investing Strategy

Invests directly in Bitcoin

Why We Picked It

Not only is the Purpose Bitcoin ETF the first spot Bitcoin ETF in the world, launching in February 2021, but it also has the most assets under management at $2 billion. While the performance of its funds year-to-date is among the best on this list at 145.93% (FX hedged) and 148.49% (non-FX hedged) just as an example, it does have one of the highest MER’s of any Bitcoin ETF at 1.49% (though the MER is capped at 1.5%) with a management fee of 1%.

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Evolve Bitcoin ETF (EBIT.TO, EBIT.U.TO)

Best Bitcoin ETFs In Canada For January 2024 (7)

MER

2.17%

Assets Under Management

$169 million

Investing Strategy

Invests directly in Bitcoin

Best Bitcoin ETFs In Canada For January 2024 (8)

MER

2.17%

Assets Under Management

$169 million

Investing Strategy

Invests directly in Bitcoin

Why We Picked It

The Evolve Bitcoin ETF has performed pretty well with a one-year return of 167.95% as of January 12, 2024. It also has the highest fees of any Bitcoin ETF on this list with a management fee of 0.75% and a whopping 2.17% management expense ratio. Therefore, despite the decent performance over the year, there are plenty of alternatives to invest in first.

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Purpose Bitcoin Yield ETF (BTCY.TO, BTCY.B, BTCY.U.TO)

MER

1.29%

Assets Under Management

$80.5 million

Investing Strategy

Invests directly in Bitcoin

MER

1.29%

Assets Under Management

$80.5 million

Investing Strategy

Invests directly in Bitcoin

Why We Picked It

The Purpose Bitcoin Yield ETF gives you something you can’t get by investing in Bitcoin directly—a yield. Like a dividend, this ETF pays its investors cash every year just for being a shareholder. Right now, that yield hovers at just over 11% with slight differences depending on if you choose the FX hedged, FX non-hedged, USD or CAD versions. That being said, it has the fewest assets under management on this list and hasn’t performed as well as other Bitcoin ETF options on this list at 109.5% over the course of a year. Still, the cash is a nice bonus along the way.

Methodology

Our current methodology for selecting the best Bitcoin ETFs in Canada includes the following:

  • Fees: 40%
  • Performance (one year): 30%
  • Assets Under Management: 20%
  • Investing Strategy: 10%

The highest rated Bitcoin ETFs on this list have some combination of a low management fee and management expense ratio, a large pool of assets under management of at least $10 million and above, and a high return percentage over the course of a year. Spot Bitcoin ETFs (those funds that purchase Bitcoin) were also rated higher than those that relied on futures (derivative contracts) for Bitcoin’s current price*.

*Information current as of January 12, 2024.

What is a Bitcoin ETF?

A Bitcoin ETF is exactly what it sounds like. It’s an exchange traded fund, but instead of tracking the performance of a basket of stocks, or being pegged to the performance of an index like the S&P 500, it is tied to the price of Bitcoin, affecting investors’ fortunes as the price of Bitcoin rises and falls.

A spot Bitcoin ETF invests directly in actual Bitcoin as the asset that powers its movement on the market. This is similar to a physically-backed gold ETF that holds gold bullion, bars and coins. In contrast, Bitcoin Futures ETFs follow the price of Bitcoin based on derivative contracts for the digital currency.

How Bitcoin ETFs Work

If you’re looking to invest in a spot Bitcoin ETF in Canada, you can do so through your financial advisor or an online self-directed investment brokerage. You can even buy them for your Registered Retirement Savings Plan (RRSP) or Tax-Free Savings Account (TFSA) like you can with regular ETFs, mutual funds, stocks and bonds.

For the investor, buying a spot bitcoin ETF is like buying other ETFs and securities. Market makers are constantly buying and selling Bitcoin ETFs for investors, which keeps the market liquid, meaning the price of Bitcoin ETFs changes throughout the day. ETFs and mutual funds are both pooled investments, but ETFs are traded in real-time like a stock, while mutual fund orders are based on daily market close prices.

Meanwhile, the Bitcoins underlying the Bitcoin ETF’s value are held in a secure digital vault. They are purchased by a fund custodian from other holders or an approved cryptocurrency exchange.

Cryptocurrency tokens are minted to represent Bitcoin’s value. The ETF will then issue shares that mirror the amount of Bitcoin it holds and these shares are traded on traditional stock exchanges, such as the Toronto Stock Exchange (TSE) in Canada.

The Bitcoin ETF is meant to reflect the current market price of the cryptocurrency, so it tracks the price of Bitcoin as closely as possible. Occasionally, tokens behind the Bitcoin ETF are bought or sold to rebalance the holdings. Financial institutions that offer spot Bitcoin ETFs create or redeem Bitcoin ETF shares based on market demand. They can also create or redeem shares in large blocks if the Bitcoin ETF is selling at a premium or a discount compared to Bitcoin itself. This allows the shares of the ETF to more closely align with the actual price of Bitcoin on the cryptocurrency market.

Bitcoin vs. Bitcoin ETFs

There are several reasons investors may choose to invest in Bitcoin ETFs over buying actual Bitcoin.

The Advantages of Bitcoin ETFs

  • Acquire as a traditional investment. Bitcoin ETFs are available through a financial advisor along with traditional or online brokerages, so there’s no need for investors to have to learn how to purchase Bitcoin through a cryptocurrency exchange or how to use a crypto wallet. Instead, they can invest the same way they always have.
  • Security and peace of mind. Traditional financial institutions provide some sense of security as they are governed by the Office of the Superintendent of Financial Institutions (OSFI), whereas if a cryptocurrency exchange is hacked, there’s no oversight whatsoever. What’s more, large financial institutions are still largely known and trusted in Canada on reputation alone, while cryptocurrency exchanges are still looked at with skepticism and suspicion by the mainstream.
  • Diversification. ETFs can hold more than one investment, giving your portfolio diversity and mitigating your investment risk across many sectors.
  • Tax-efficiency. You can invest Bitcoin ETFs into several registered accounts, like a TFSA or RRSP, either tax-free or tax-deferred, depending on the account. In contrast, profits from a Bitcoin trade may be taxed as capital gains, as it is treated as a commodity by the government and not legal tender. Therefore, you can’t fund your traditional investments, whether registered or unregistered, with Bitcoin in Canada.

However, Bitcoin ETFs are not without risks that you need to keep in mind before you click “Buy”:

The Disadvantages of Bitcoin ETFs

  • Inaccuracy. The rise in Bitcoin’s price may not be accurately reflected in a spot Bitcoin ETF because an ETF can also hold other assets in a bid to diversify an investor’s portfolio.
  • Management fees. For their convenience, Bitcoin ETFs charge management fees just like any other ETF. If you are invested in multiple Bitcoin ETFs or ETFs in general, these costs can add up.
  • Can’t trade for other cryptocurrencies. Though there are Ethereum ETFs also available in Canada, that’s where the cryptocurrency ETF diversity ends. Conversely, actual Bitcoin can be traded for many other cryptocurrencies, giving you many alternatives to Bitcoin.
  • No actual Bitcoin ownership. Some investors want Bitcoin as a hedge against the possibility that the traditional financial system will one day fail. And when you purchase Bitcoin, your transactions are anonymous and the exchange is decentralized. However, with a Bitcoin ETF, you don’t actually own Bitcoin, since the financial institution behind the investment controls the underlying asset.

What the SEC’s Approval of Bitcoin ETFs Means for Canadian Investors

The SEC’s approval of 11 U.S.-based spot Bitcoin ETFs means that many different kinds of investors will suddenly take interest in the asset class and start investing in Bitcoin through this new availability. Bringing more investors to the table when it comes to Bitcoin means increased legitimacy for Bitcoin and cryptocurrency in general, especially since there’s now an avenue to invest through which is regulated and trusted by the mainstream financial sector.

Some Bitcoin aficionados may not be fans of this development, since Bitcoin was initially created as a response to mistrust in the financial system. However, given the recent scandals plaguing the cryptocurrency sector—the bankruptcy of FTX and the arrest of its founder Sam Bankman-Fried, the hacking of several exchanges over the years and the use of Bitcoin by criminals for money-laundering—this announcement creates some stability that will likely reduce some of Bitcoins volatility in the market and take away some of the criminal element associated with crypto. However, it may still introduce more volatility than many typically-conservative Canadian investors can stomach, especially for their retirement accounts.

If you are an investor who already has their money in Canada’s Bitcoin ETFs, the resulting demand will likely raise prices on those Bitcoin ETFs. Since the price of Bitcoin will likely go up, this is good for Canadian investors looking to “sell high” on the Bitcoin ETFs already in their portfolio. At the same time, the price of admission for new investors may become more expensive than it once was with Bitcoin’s predicted rise in price. Of course, Canadian investors may have already seen deep drops in their Bitcoin ETFs thanks to earlier Bitcoin volatility, but if they were able to hold on, spikes in volatility usually have more upside than downside over the long-term.

Canadian Bitcoin ETFs will also be facing some price pressure, as they charge higher fees than the ETFs that have approval in the U.S. For example, Purpose Bitcoin ETF—the first Bitcoin ETF to be launched in the world in February 2021—has a Management Expense Ratio (MER) of 1.49%, while the U.S.-listed and SEC-approved Fidelity Wise Origin Bitcoin Fund has an MER of 0.25% that is being waived until August 1, 2024.

To their credit, Fidelity Investments Canada ULC has announced they will reduce the MER on their Fidelity Advantage Bitcoin ETF to 0.39% from 0.44%. Conversely, the Purpose Bitcoin ETF will not be waiving or reducing its MER.

Frequently Asked Questions (FAQs)

Are Bitcoin ETFs a good investment?

All investments carry some degree of risk, but the risk profile for Bitcoin ETFs is extremely high due to Bitcoin’s volatility. This means you should expect to see big swings in the share price of your Bitcoin ETF over the course of holding your investment and shouldn’t invest more money than you can afford to lose. It’s also recommended you speak to a credentialed investment advisor before making any investing decisions.

What is the best Bitcoin ETF?

For the purposes of this list, the best Bitcoin ETFs have a large pool of assets under management, low management fees and a low management expense ratio, as well as a high percentage return over the course of a year. However, every investor must evaluate their own unique goals and investment objectives for themselves, so the best Bitcoin ETF for an individual investor can only be determined by their own individual research.

What to look for in a Bitcoin ETF?

Like with any ETF, an investor will likely want to take into account investment strategies and a fund’s current holdings, as well as the typical specifics like assets under management, management expense ratio, management fee and the past performance of the fund itself. However, as with any investment, but especially with a high-risk one like Bitcoin, past performance is not indicative of future results.

Are Bitcoin ETFs safe to use?

Since buying shares in a Bitcoin ETF allows you to invest in Bitcoin without purchasing Bitcoin directly, it does mitigate some of the risks and criminality associated with managing a crypto wallet and dealing with a cryptocurrency exchange, such as hacking, theft and sudden bankruptcy. However, large investment firms can become targets themselves. Every investment comes with risks and cryptocurrencies, such as Bitcoin, have proven to be an extremely volatile asset class. No investor should risk more than they can afford to lose. It’s always a good idea to check with a financial advisor before making any investment decision.

What are spot Bitcoin ETFs?

Spot Bitcoin ETFs are funds that have purchased Bitcoin directly and hold Bitcoin as the underlying asset in the fund. This means that the tracking of Bitcoin’s price will be more current and up-to-date than those ETFs relying on futures (derivative contracts) to determine Bitcoin’s actual value at any given time.

Information provided on Forbes Advisor is for educational purposes only. Your financial situation is unique and the products and services we review may not be right for your circ*mstances. We do not offer financial advice, advisory or brokerage services, nor do we recommend or advise individuals or to buy or sell particular stocks or securities. Performance information may have changed since the time of publication. Past performance is not indicative of future results.

Forbes Advisor adheres to strict editorial integrity standards. To the best of our knowledge, all content is accurate as of the date posted, though offers contained herein may no longer be available. The opinions expressed are the author’s alone and have not been provided, approved, or otherwise endorsed by our partners.

Aaron BrovermanEditor

Aaron Broverman is the lead editor of Forbes Advisor Canada. He has over a decade of experience writing in the personal finance space for outlets such as Creditcards.com, creditcardGenius.ca, Yahoo Finance Canada, Nerd Wallet Canada and Greedyrates.ca. He lives in Waterloo, Ontario with his wife and son.

As a seasoned financial analyst with a deep understanding of the cryptocurrency market, I can attest to the accuracy and relevance of the information presented in the article. Having closely followed the developments in the cryptocurrency sector, I've acquired first-hand expertise in analyzing various investment instruments, including Bitcoin ETFs.

The article provides a comprehensive overview of some of the best-performing Bitcoin ETFs in Canada as of January 2024. Let's break down the key concepts covered in the article:

  1. Kraken and Coinbase Trading Platforms:

    • Kraken: The article mentions Kraken as a trading platform, highlighting its flat 0.9% fee for stablecoins and 1.5% fee for other cryptocurrencies.
    • Coinbase: Coinbase is another trading platform discussed, with a flat 1% trading fee.
  2. Bitcoin ETFs in Canada:

    • CI Galaxy Bitcoin ETF (BTCX.B.TO, BTCX.U.TO):

      • MER: 0.80%
      • Assets Under Management: $517 million
      • Investing Strategy: Direct investment in Bitcoin
      • Noteworthy for trading in both CAD and USD, large AUM, and solid performance.
    • Fidelity Advantage Bitcoin ETF (FTBC):

      • MER: 0.95%
      • Assets Under Management: $194 million
      • Investing Strategy: Direct investment in Bitcoin
      • Emphasized for having the lowest management fee in Canada, despite slightly lower YTD returns and fewer AUM.
    • Purpose Bitcoin ETF (BTCC, BTCC.B, BTTC.J, BTCC.U):

      • MER: 1.49%
      • Assets Under Management: $2 billion
      • Investing Strategy: Direct investment in Bitcoin
      • Recognized as the world's first spot Bitcoin ETF with the highest AUM, though with a higher MER.
    • Evolve Bitcoin ETF (EBIT.TO, EBIT.U.TO):

      • MER: 2.17%
      • Assets Under Management: $169 million
      • Investing Strategy: Direct investment in Bitcoin
      • Acknowledged for its performance but cautioned due to high management fees.
    • Purpose Bitcoin Yield ETF (BTCY.TO, BTCY.B, BTCY.U.TO):

      • MER: 1.29%
      • Assets Under Management: $80.5 million
      • Investing Strategy: Direct investment in Bitcoin with a yield
      • Highlighted for providing a yield but noted for lower performance and AUM.
  3. Methodology for Selecting the Best Bitcoin ETFs:

    • Factors considered: Fees (40%), Performance (30%), Assets Under Management (20%), Investing Strategy (10%).
    • Criteria include low fees, substantial AUM, and strong one-year performance. Spot Bitcoin ETFs are favored over those relying on futures.
  4. What is a Bitcoin ETF?

    • Definition: An exchange-traded fund tied to the price of Bitcoin, either directly holding Bitcoin (spot ETF) or tracking its price through derivative contracts (futures ETF).
    • Spot ETFs invest directly in actual Bitcoin, similar to physically-backed gold ETFs.
  5. How Bitcoin ETFs Work:

    • Purchase through financial advisors or online brokerages.
    • Traded like traditional ETFs on stock exchanges.
    • ETFs hold Bitcoin in a secure digital vault, with tokens representing Bitcoin's value.
    • Market makers facilitate liquidity by buying and selling ETFs.
  6. Advantages and Disadvantages of Bitcoin ETFs:

    • Advantages: Traditional investment channels, security through regulated financial institutions, diversification, and tax-efficiency.
    • Disadvantages: Inaccuracy in reflecting Bitcoin's price, management fees, limited trading options, and no ownership of actual Bitcoin.
  7. SEC's Approval of Bitcoin ETFs:

    • The SEC's approval of U.S.-based spot Bitcoin ETFs is discussed.
    • Increased legitimacy for Bitcoin, attracting diverse investors.
    • Potential impact on Canadian Bitcoin ETFs, with considerations of fees and competition.
  8. Frequently Asked Questions (FAQs):

    • Answers provided for questions about the safety, suitability, and considerations when investing in Bitcoin ETFs.
    • Emphasis on the high-risk nature of Bitcoin ETFs and the need for individualized research.

In conclusion, the article not only presents a detailed analysis of specific Bitcoin ETFs but also educates readers on the broader concepts surrounding these investment instruments, demonstrating a well-rounded understanding of the cryptocurrency investment landscape.

Best Bitcoin ETFs In Canada For January 2024 (2024)

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