Here’s Why This Ethereum ETF Might Be the Best Crypto Stock in Canada

There are tonnes of different ways to gain exposure to cryptocurrencies in Canada, but this Ethereum ETF offers the best growth potential.

| More on:
exchange-traded funds

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn more

The cryptocurrency industry has exploded since the start of 2020, with Bitcoin up a whopping 470%. However, Ethereum is up over 1,850%. So, when several Bitcoin ETFs were launched in Canada earlier this year, many investors were eagerly waiting for an Ethereum one.

The crypto industry is a tricky place to invest, though. On the one hand, you have assets like Bitcoin and Ether that could actually be solid long-term investments. Then, on the other hand, you have assets like Dogecoin, which was created as a joke and has little to no real value.

There’s a reason, though, why only Ethereum and Bitcoin are going mainstream. There’s a reason you can buy a Bitcoin or Ethereum ETF in Canada, but not one for Dogecoin.

There are many more cryptocurrencies like Dogecoin that offer no real value than there are like Bitcoin or Ethereum, offering real long-term potential.

In fact, you can at least spend Dogecoin in a select number of places, unlike thousands of other cryptocurrencies, which essentially have no use case.

Why Bitcoin and Ether are the top cryptocurrencies

There are certainly cryptocurrencies besides Ethereum and Bitcoin that could be worth an investment. However, as I said before, there’s a reason why in Canada, you can only buy an ETF that invests in Bitcoin or Ethereum. So, unless you understand these technologies well and have hundreds of hours to do the research, your best bet is to stick with these two.

If a cryptocurrency is going to have value as a real currency, one of the most fundamental things it needs are use cases that give it value. For Bitcoin, because it’s so widely held globally, it’s a growing medium of exchange. Plus, as it’s gotten less volatile over the last year, it’s quickly becoming a store of value, especially with many fiat currencies being devalued globally.

The list of places you can spend it continues to grow. Without that, though, Bitcoin would have a lot less value.

Other cryptocurrencies, such as Ether, are worth an investment because of the blockchain technology they power. Investors have caught onto this, which is why soon after several Bitcoin ETFs were launched in Canada, so too was an Ethereum ETF.

The Ethereum network continues to have a tonne of potential. Having the ability to enable smart contracts is just the tip of the iceberg, and this technology will only continue to grow as the cryptocurrency industry expands.

For example, many of the most valuable cryptocurrencies you can buy operate on the Ethereum network. An example is Wrapped Bitcoin, the 22nd most valuable cryptocurrency in the world.

Wrapped Bitcoin is a token on the Ethereum network that can be exchanged 1:1 with a real Bitcoin. However, the Wrapped Bitcoin was created so that investors could use Bitcoin more freely and easily on the Ethereum network.

So, while there are plenty of reasons to buy Bitcoin, in my view, the potential Ethereum offers investors over the long term is unmatched.

A top Ethereum ETF in Canada

There are a variety of ways to gain exposure to Ether. You could buy it yourself, or you could buy a stock with heavy exposure to Ethereum. However, one of the best ways, in my view, is to buy CI Galaxy Ethereum ETF (TSX:ETHX.B).

Owning the ETF is a superior investment for several reasons. Firstly, buying the ETF that holds Ether can be beneficial if you do it in a registered account like the TFSA.

This would allow you to save on the taxes instead of buying the Ether yourself outside a registered investment account. With Ether prices up 1,500% over the last 12 months, saving on taxes is a big consideration.

Plus, buying it yourself can be complicated and extremely costly. It will almost surely be cheaper for most investors to simply pay the commission costs of buying an ETF.

Furthermore, buying the ETF is not just less risky than buying the Ether yourself. It’s also a lot less risky than buying a cryptocurrency miner.

Much of the growth and innovation in cryptocurrency happens on the Ethereum network. So, if you’re looking to gain exposure to the rapidly growing cryptocurrency industry, this Ethereum ETF is one of the top investments in Canada.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Daniel Da Costa has no position in any of the stocks mentioned.

More on Stocks for Beginners

Volatile market, stock volatility
Stocks for Beginners

3 Top TSX Stocks to Buy in Volatile Markets

Sitting on cash? Consider these three TSX stocks for the long term.

Read more »

potted green plant grows up in arrow shape
Stocks for Beginners

1 Canadian Growth Stock That Could Double Your Money in an Economic Recovery

The market downturn is an opportunity to lock growth during the economic recovery. This stock is a blend of value,…

Read more »

edit Safe pig, protect money
Stocks for Beginners

2 Safe TSX Stocks for Beginners to Buy in a Market Correction

These two TSX stocks are still solid long-term buys today, despite the recent market correction.

Read more »

Human Hand Placing A Coin On Increasing Coin Stacks In Front Of House
Stocks for Beginners

3 Real Estate Stocks to Buy for Terrified Investors

Motley Fool investors shouldn't be afraid of investing in real estate if they have a long-term growth strategy, but these…

Read more »

Value for money
Stocks for Beginners

Market Correction: A New List of Value Stocks Just for You

The 2022 stock market has been bearish, with tech stocks being the biggest losers. But tables are turning. It's time…

Read more »

Knowledge concept with quote written on wooden blocks
Stocks for Beginners

3 Reasons Why Inflation Impacts Canadian Stocks

Here are the three most common ways inflation impacts Canadian stocks, why they're selling off, and when you'll want to…

Read more »

Growth from coins
Stocks for Beginners

2 Growth Stocks New Investors Can Buy on the Dip Today

After the recent market correction, many growth stocks look cheap, making it a perfect time for stock market beginners to…

Read more »

Make a choice, path to success, sign
Stocks for Beginners

3 Reasons Cineplex Stock Is a Better Buy Than Air Canada

Although both Air Canada and Cineplex stock are ultra-cheap, here's why the entertainment company is a much better investment.

Read more »