1 Bitcoin ETF to Buy if You Love Cryptocurrency

Crypto lovers in Canada can buy Purpose Bitcoin ETF instead of investing in Bitcoin. You don’t have to set up a digital wallet and obtain a private key. The ETF pioneer is the next-best alternative to the volatile digital currency.

| More on:
edit Balloon shaped as a heart

Image source: Getty Images.

Bitcoin is notorious for its high volatility. The digital currency has no supervision by a central entity. Also, there’s no physical asset that backs it up, because it’s 100% digital. Likewise, the mining of the coin has limitations up to 21 million only to protect the value.

Investors can purchase and trade Bitcoin on a cryptocurrency exchange, which is similar to a stock market. Besides Bitcoin, you can access other cryptos through the platform. Some people buy digital tokens from regular investing apps like Robinhood. A Bitcoin purchase could either be an investment or an alternative currency.

However, those who love or are interested in Bitcoin might find the investing process tedious and unsafe. You need to set up a digital wallet (hardware or web-based) that contains a private key. If the key is lost or stolen, you can kiss your digital currency goodbye.

Fortunately, the TSX allowed Bitcoin exchange-traded funds (ETFs) in 2021. Canadians can gain exposure to Bitcoin, including its value but without actual ownership. Another attraction is that the ETF is an eligible investment in a Tax-Free Savings Account (TFSA), Registered Retirement Savings Plan (RRSP), and non-registered accounts.

Pioneer Bitcoin ETF

Canada is the first to include Bitcoin ETFs in North America’s stock market. The three prominent names are Purpose Bitcoin ETF (TSX:BTCC.B), Evolve Bitcoin ETF, and CI Galaxy Bitcoin ETF. If you plan to invest today, the pioneer Purpose Bitcoin is the logical choice.

Regulators gave the green light to Purpose Investment Inc. to launch the Purpose Bitcoin ETF on the TSX for regular investors. The official first trading was February 18, 2021, and the fund collected a total of $421.8 million AUM (assets under management) a day later.

Purpose Investment, the fund manager, explains that when you buy units of the ETF, they purchase or invest directly in physically settled Bitcoin, not derivatives. Investors can then add actual Bitcoin to their investment portfolios then choose to buy and sell BTCC as they would a regular stock.

ETF rating

Purpose Investments reminds overzealous crypto investors about investing in the ETF. The fund manager rates BTCC as a high-risk, high-reward ETF. Since it mimics Bitcoin’s performance, there are potential gains as well as potential losses. However, Purpose’s Fact Sheet also describes the ETF as appropriate for investors with a high-risk tolerance and who want capital growth over the long term.

Bitcoin’s nature is unstable, so the underlying asset is generally a high-risk investment. The risk factors include price volatility, increasing need for regulation, legislation changes, and attacks by hackers on trading platforms. The world’s most popular digital currency suffered a major setback in May 2021, following a 35% month-over-month decline.

The drop reflects in BTCC’s performance, because the ETF fell by 36% during the same period. As of June 18, 2021, the price is $7.36 from a peak of $12.01 on May 7, 2021. BTCC currently holds 20020.7098 Bitcoin coins in cold storage.

Next-best alternative

Bitcoin investors should understand that Purpose Bitcoin ETF is very new. You’ll only know the return performance one year after its inception. Likewise, every investor must pay a 1.00% management fee when investing in the ETF.

While Bitcoin remains a speculative asset, North America’s first Bitcoin ETF is the next-best alternative to owning the digital currency. According to crypto investors, Bitcoin still has the potential to become an enduring store of wealth.

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 Christopher Liew has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

More on Investing

Gold bars
Metals and Mining Stocks

Gold Stocks That Could Soar if the Fed Pauses Rate Hikes

In choppy waters, two gold heavyweights look too good to pass up right now given their lowered entry points, dividend…

Read more »

Clean energy
Energy Stocks

Better Buy: Renewable Energy or Uranium Stocks?

The world is shifting towards clean energy sources, creating investment opportunities in the renewables sector. What's a better bet: environmental…

Read more »

retirees and finances
Energy Stocks

These 3 Stocks Can Help Make You Richer by Retirement

Future retirees can be rich in their sunset years with the help of three distinguished dividend-payers on the TSX.

Read more »

A worker uses the cloud for paperless work. tech
Tech Stocks

Why I Think Constellation Software (TSX:CSU) Stock Has Market-Beating Potential

Constellation Software (TSX:CSU) could outperform the market over the next few years.

Read more »

data analytics, chart and graph icons with female hands typing on laptop in background
Investing

Got $5,000? These Are 2 of the Best TSX Growth Stocks to Buy Right Now

Canadian investors with some extra cash on hand should look to snatch up TSX growth stocks like goeasy Ltd. (TSX:GSY)…

Read more »

Senior Couple Walking With Pet Bulldog In Countryside
Dividend Stocks

Retirees: 2 On-Sale TSX Dividend Stocks to Buy Now for Passive Income

These top TSX dividend stocks now offer 6% yields.

Read more »

Electric car being charged
Investing

Forget Rivian: This Canadian EV Stock Is Cheaper and Safer

If you're still tempted to buy EV stocks, Magna International (TSX:MG) is probably safer than Rivian (NASDAQ:RIVN).

Read more »

Payday ringed on a calendar
Dividend Stocks

New Investors: The 3 Best TSX Dividend Stocks for Monthly Cash

New investors looking for monthly dividend cash are in luck! Here are three attractive Canadian dividend stocks for growth and…

Read more »