If you have had an interest in investing in Bitcoin, you might finally have the chance to gain exposure to the cryptocurrency without the worries of losing your private keys or getting hacked.
Purpose Investments became the company to launch the world’s first Bitcoin ETF in February 2021.
It also means that you don’t have to make an account with a cryptocurrency exchange because Exchange-Traded Funds are available through your existing brokerage accounts.
Bitcoin is an asset class that is extremely risky but intriguing. I understand that the launch of the ETF has made it more accessible to investors, and it is natural to want to know more about whether it’s a worthwhile investment.
My BTCC ETF review will cover everything you need to know about its asset allocation, fees, returns, pros, cons, and how you can purchase it in Canada to help you make an informed decision.
Invest In Bitcoin
Gain exposure easily to the world’s first cryptocurrency through the first cryptocurrency ETF approved in Canada.
- Easy to trade and gain exposure to Bitcoin, even if you’re new to cryptocurrencies.
- Sold on regulated brokerage platforms with access to CIPF protection.
- Better liquidity than buying the commodity itself.
- Can be held in registered investment accounts for tax-free gains.
- Eliminates the need to create your own wallet to store the cryptocurrency.
- Volatile and risky asset.
- High management fees.
- Not a diversified ETF
What Is Purpose Bitcoin BTCC ETF?
Purpose Bitcoin BTCC ETF is an Exchange-Traded Fund that offers investors easier exposure to Bitcoin in the form of a publicly traded security available on the Toronto Stock Exchange.
Similar to purchasing popular commodity ETFs on the TSX, Purpose Bitcoin ETF provides you with exposure to actual Bitcoin without you having to buy the cryptocurrency yourself.
Launched by Purpose Investments in February 2021, BTCC ETF became the world’s first Bitcoin ETF. The fund holds 2,2046.37 Bitcoin units as of August 20, 2021, bringing the assets under management over $1.4 billion.
The fund comes with a high-risk rating due to the volatility of the underlying asset. Bitcoin and other cryptocurrencies are an extremely volatile asset class with substantial intraday increases or decreases in valuations.
These features of the underlying commodity held by the fund significantly increase the volatility of the ETF.
BTCC ETF trades on the TSX under three different tickers:
- BTCC: Purchased with Canadian dollars and hedged against US dollar exposure.
- BTCC.B: Also purchased using Canadian dollars but does not hedge against US dollar fluctuations.
- BTCC.U: Denominated in US dollars.
Here are some of the key facts about BTCC as of August 23, 2021:
- Inception Date: February 18, 2021
- Assets Under Management: $1.4 billion
- Management Fee: 1.00%
- MER: Capped at 1.50%
- Eligible Accounts: Registered and non-registered accounts
- BTC per share: 0.00016135
- Shares per BTC: 6,197.7895
What Does BTCC ETF Invest In?
This section of my BTCC ETF review will discuss the fund’s asset allocation.
ETFs are typically considered as an ideal way to get exposure to a basket of securities to investors, allowing them to diversify their capital allocation across several securities. Most ETFs offer a relative degree of safety to investors by diversifying funds into different assets. If the price of one of the securities within the fund’s portfolio declines, the price of other commodities can offset the losses for investors.
However, BTCC ETF allocates 100% of its funds in “physically settled” Bitcoin. It means that Purpose Bitcoin ETF holds no other assets besides Bitcoin.
Holding BTCC worth a certain price in your investment portfolio is the equivalent of holding the same number of Bitcoin units that you would get if you purchased the commodity. 100% exposure to a single commodity through the ETF means that your investment portfolio could see significant hikes and declines as the asset’s price rises and falls because your portfolio is not diversified.
Usually, ETFs diversify your money across multiple investments that are related by industry or geography. However, BTCC ETF only invests your cash in Bitcoin.
Considering that cryptocurrencies are not yet available as a recognized currency by traditional brokerages and banks, it is the only way for a retail investor to purchase Bitcoin on the stock market.
Purpose Bitcoin ETF is the first ETF in the world to be physically backed by Bitcoin and not derivatives, making it similar to gold and silver ETFs already trading on the TSX.
BTCC will retail investors to invest in Bitcoin without having to purchase and store the digital currency themselves.
When you buy the ETF, Purpose Investments purchase Bitcoin with your money. By holding the ETF, you essentially hold actual Bitcoin in your portfolio.
Since BTCC ETF is a more liquid asset than Bitcoin itself, it becomes far easier for you to trade your Bitcoin holdings by buying and selling the ETF units based on the cryptocurrency’s prices. Just like buying shares of your favorite stock, you can buy and sell Bitcoin seamlessly in your portfolio through Purpose Bitcoin ETF.
BTCC ETF Price
Purpose Bitcoin ETF is easily one of the most volatile ETFs that you can find on the TSX. The price changes for the ETF reflect the volatile price of the underlying commodity that the fund holds.
The fund’s price keeps changing drastically day in and day out, much like Bitcoin. It would not make sense to mention the BTCC ETF price at the time of writing here due to the significant intraday changes. Here is a link that you can use to find out the current price of Purpose Bitcoin ETF.
Buying BTCC ETF solves several problems that cryptocurrency investors face while buying Bitcoin by making it available on the TSX. Before Purpose Bitcoin ETF came along, people investing in Bitcoin had to purchase it on cryptocurrency trading platforms that are separate from their regular brokerage.
These platforms have a reputation for being slow, buggy, and vulnerable to hackers who are always looking for an easy way to make financial gains at the expense of other people.
Users typically find themselves waiting several days for their transfers to be accepted so that they can deposit money into their accounts for trading. Unfortunately, it also means that Bitcoin holders are unable to sell and withdraw their holdings on time to capture profits.
Buying and selling Bitcoin on the TSX through BTCC, BTCC.B, and BTCC.U allows you to buy and sell your exposure to Bitcoin without experiencing the lag and delays that are a notorious quality for cryptocurrency trading platforms.
Getting exposure to Bitcoin in the form of a more liquid ETF also means that you can withdraw any amount at any time by simply selling your BTCC shares on the market.
Security risks are a primary concern for cryptocurrency investors because holders are solely responsible for protecting and storing their cryptocurrency in digital wallets.
Unfortunately, people have lost a significant portion of their cryptocurrency holdings due to security issues. It is estimated that up to 20% of all Bitcoin has been lost forever due to issues like people forgetting their passwords or accidentally deleting their digital wallets.
Since the blockchain technology used to secure Bitcoin is highly effective, locking yourself out of your digital wallet means that your cryptocurrency holdings in that wallet are pretty much gone forever. Fortunately, recovering passwords for brokerage accounts is much easier. Since the securities you buy with your brokerage account are not stored on your computer, you will never accidentally delete your ETF holdings.
Additionally, Purpose Bitcoin ETF offers greater security for your Bitcoin by storing most of the Bitcoin that the fund buys with your money in cold storage, keeping it safe from hackers and data breaches.
This section of my BTCC review would cover the performance of the asset on the TSX and the management fees you can expect to pay.
Purpose Bitcoin ETF launched only a few months ago at writing, which means that its performance results are not yet available. Investors should be able to see its returns by February 2022, as the ETF completes a year of trading on the TSX.
The management fee for BTCC ETF is 1.00%, and the Management Expense Ratio (MER) for the cryptocurrency has been capped at 1.50%. Investors buying BTCC ETF pay much more in management fees compared to many low-fee ETFs.
How To Buy BTCC ETF In Canada
The cheapest way to buy ETFs is from discount brokers. My top choices in Canada are:
|Wealthsimple Trade||Get $50 Signup Bonus|
|Questrade||Get $50 Free Stock Trades|
To learn more, check out my full breakdown of the best trading platforms in Canada here.
BTCC Purpose Bitcoin ETF is an excellent option for investors who want exposure to Bitcoin without facing the challenges and several risks associated with buying the cryptocurrency. Buying shares of the ETF means that the fund will handle it all for you.
Additionally, buying and holding BTCC ETF in your investment portfolio lets you get more liquid exposure to the cryptocurrency. You can buy and sell your exposure to Bitcoin to capture profits without facing the considerable delays that are a notorious feature for cryptocurrency exchanges.
Perhaps the biggest advantage of BTCC ETF is that investors can buy and hold the ETF in registered accounts like a Tax-Free Savings Account (TFSA) or a Registered Retirement Savings Plan (RRSP) to enjoy tax-sheltered returns from their investment.
While the ETF makes it easier than ever to invest in Bitcoin, it does not eliminate the risks of investing in cryptocurrency.
If you are an investor with the stomach to bear the volatility that comes with investing in cryptocurrencies, it’s not a bad idea to add a small amount of cryptocurrency to your portfolio through BTCC ETF. However, I would recommend focusing the bulk of your wealth on more traditional assets in the stock market.