Canadian Bitcoin Etf - Easier Way to Buy & Hold Bitcoin

ETFs track the value of underlying assets by having their value pegged to them. This system eliminates the need for investors to deal directly with the actual asset of the ETF. When, for example, an investor wants to invest in gold but is not interested in dealing with the precious metal personally, an ETF tracking the gold market could provide the investor with exposure to gold without having to deal with it physically.

What is a Bitcoin ETF

Bitcoin ETFs follows the price of the world's most popular crypto currency. The ETF has been set up so that investors can buy into bitcoins without having to go through the cumbersome process of trading bitcoins themselves. Also, holders of the ETF will not have to deal with either the complicated storage procedures or the security procedures that Bitcoin investors will face since the funds will not be invested directly in bitcoin.

Benefits of Bitcoin ETF

Convenience: Bitcoin exchange traded funds allow you to access bitcoin price volatility without understanding how the blockchain works, signing up for a crypto exchange, and taking on the risks of direct bitcoin ownership. A bitcoin investor can lose their bitcoin forever if they forget their wallet password. With Bitcoin ETFs investors do not have to worry about losing anything or forgetting a wallet key etc. Investing in bitcoins is made simpler by the use of a bitcoin ETF.

Diversification: Several assets can be held by an ETF. A Bitcoin ETF, for example, could hold bitcoin along with other crypto currencies, and many other stocks, allowing investors to diversify and mitigate risk. Additionally, an ETF that trades on a regulated exchange would offer investors an advantage of diversifying their current equity portfolio through access to the bitcoin market.

Tax Sheltered: Since bitcoin is a decentralized and unregulated currency, Bitcoin has been banned by most tax havens and pension funds around the world. In contrast, a bitcoin ETF is traded on a regulated exchange and because of this would be eligible to be held in a tax sheltered account. currently Bitcoin ETFs are only regulated in Canada so only Canadian can hold Bitcoin ETFs within their Canadian tax sheltered accounts such as RRSP and TFSA.

Risks of Bitcoin ETFs

Fees: The convenience that ETFs offer usually comes with a management fee. As a result, having a significant portion of your portfolio invested in a Bitcoin ETF could result in higher management fees in the long run.

Ownership of the Bitcoin: Cryptocurrencies, such as Bitcoin, protect investors against central banks, fiat currencies, and equities. Bitcoin, because it is decentralized and independent of central banks, is a very effective way of reducing financial system risks. Through the bitcoin blockchain, cryptocurrency users and investors are protected in terms of privacy. The government would regulate bitcoin ETFs, thereby eliminating these advantages. Also because the ETF fund hold the actual Bitcoin, you technically only own a share of the underlying Bitcoin asset.

No Exchanging of Bitcoin: Each cryptocurrency has its own characteristics, communities and markets, and Bitcoin is just one of many. Cryptocurrency exchanges like Binance and Coinbase allow traders to trade Bitcoin for each of these. With a Bitcoin ETF you are stuck with whatever underlying assets the ETF holds. You cannot exchange the funds Bitcoin for another crypto currency.

How to invest in Bitcoin ETFs

Unfortunately the only regulated Bitcoin exchange traded funds are in Canada and are listed and trading on the Toronto Stock Exchange. There is a strong push in the United States to have Bitcoin ETFs regulated and approved for trading, but it has not yet happened. There are currently just half a dozen pure Bitcoin ETFs on the Canadian market, and a couple of mixed crypto ETFs that combine Bitcoin with another crypto currency such as Ethereum. If you are interested in finding out more about these Canadian ETFs then check out this extensive article that list which are the best Bitcoin ETFs in Canada it will help breakdown the different Bitcoin ETFs, their management fees, Bitcoin holdings and much more.

It is important to remember that Bitcoin ETFs are not any safer than investing in and holding actual Bitcoin. Because the funds track the price of the underlying Bitcoin if Bitcoin price falls drastically, so to will the price of the Bitcoin ETF. I know everyone thinks Bitcoin is going to the moon, and it might but it might not do it as fast or when you think it will.

This article is not intended as financial advise in anyway and everyone should consult a financial professional prior to making any financial or investing decision.