1 Bitcoin ETF You Can Put in Your TFSA

Bitcoin ETFs tend to faithfully track the value of the underlying volatile asset and come with the added advantage of registered account eligibility.

| More on:
crypto blockchain

Image source: Getty Images

Bitcoin has experienced two different growth phases since 2020, though the two are completely disassociated with each other on scale. The first growth phase pushed the value of the leading crypto up 10 times, and the next growth phase merely doubled it. It couldn’t maintain either peak for too long and is trading at a sizeable discount from its last peak.

Another 10 times growth spurt, in both short and long-term, is currently too distant a prospect. However, if you are looking for more realistic growth, somewhere in the order of 70% to 100% within 2022, Bitcoin could be a smart option. That’s the level it can achieve just by re-reaching its former peak or slightly going beyond.  

The problem with that is since Bitcoin cannot be kept in your TFSA and you might need to sell it (to cash in the gains) within the year, the short-term capital gains tax alone shaves off a significant portion of the profits.

The solution: a Bitcoin ETF

A Bitcoin ETF like CI Galaxy Bitcoin ETF (TSX:BTCX.U), which is hedged in U.S. dollars (you can also get a CAD version), can be a perfect solution. As a purely bitcoin-focused ETF, it offers you direct exposure to Bitcoin. It’s a relatively new ETF, and only started trading on the TSX in March 2021. So far, it has been quite faithful in following Bitcoin’s appreciation.

In the last 12 months, Bitcoin rose slightly over 122% between the lowest and highest point. The ETF rose 125% over the same period. This slight magnification might simply be a result of the currency difference (USD/CAD), which means sometimes it might underperform the underlying asset, but only by a very small margin.

Also, it’s partially balanced out by the MER of 0.4%.

The TFSA advantage

Investing in a relatively unfamiliar asset class, especially one as volatile as Bitcoin, might not be every investor’s cup of tea. However, ETFs are an investment medium most investors understand and are comfortable with. And since it’s trading at $8.14 share, you can get several full units for the dollar amount that would have only gotten you a few fractions of a full Bitcoin.

But the real advantage of choosing the ETF over the crypto is the fact that it can be placed in your TFSA. This way, you can take advantage of its short-term growth potential, and if it’s expected to grow by 100% within 2022, you will be able to double part of your TFSA capital (what’s invested in this ETF) in under a year and can use it for other investments.

Foolish takeaway

The risk rating for this ETF is high, which is reasonable considering the underlying asset class. But like most other risky investments, the reward potential is proportionally high. And even though holding it long-term is highly likely to be profitable even if you buy at the current price, you may consider buying the dip, which might not be too far away, considering recent fluctuations in the Bitcoin price.   

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 Adam Othman has no position in any of the stocks mentioned. The Motley Fool owns and recommends Bitcoin.

More on Cryptocurrency

crypto, chart, stocks

2 Top Crytos to Buy Right Now

Here are two top cryptos investors may want to consider right now, given the sharp selloff we've seen in this…

Read more »

Diagonal chain made of zeros and ones. Cryptocurrency and mining.

2 Cryptocurrency Stocks Investors Can Buy Right Now

Cryptocurrency stocks such as Coinbase and Hut 8 Mining are trading at attractive valuations, making them attractive to long-term investors.

Read more »

cryptocurrency, crypto, blockchain

2 Top Cryptocurrencies That Can Be Part of Your Portfolio in 2022

Cryptocurrencies such as Polygon and Solana are trading significantly lower compared to all-time highs but remain a top bet right…

Read more »

Big Bitcoin logo.

Is Bitcoin the Store of Value Everyone Thought?

Is Bitcoin a true store of value or just another high-risk, high-upside asset class that's likely to remain volatile in…

Read more »


Luna Collapse: Beginning of the End for Crypto?

The cryptocurrency Luna (CRYPTO:LUNA) crashed nearly 100% last week. Does this spell bad news for the entire cryptocurrency market?

Read more »

A depiction of the cryptocurrency Bitcoin

Bitcoin Dropped Below US$30,000: Good Time to Buy?

The world’s most popular cryptocurrency dropped below its psychological level, but it isn’t a buy, as analysts predict a further…

Read more »

cryptocurrency, crypto, blockcahin

Crypto Gains Wiped Out: Buy or Sell Bitcoin?

Many crypto investors now have a critical decision to make: exit their positions and cut their losses or buy at…

Read more »

crypto blockchain

Crypto Crash: Can Terra Regain its Lost Glory?

The LUNA token was one of the largest cryptocurrencies in the world. But it has lost almost 100% of its…

Read more »