Bitcoin is the world’s most popular cryptocurrency. Though digital, people often draw comparisons to an asset like gold, and consequently some investors use it to hedge against inflation and market volatility. As a platform, Bitcoin is a blockchain that facilitates the transaction of value in a peer-to-peer fashion. It launched in 2009 and has since seen its value increase exponentially.
As Bitcoin has increased in popularity and gained more widespread awareness, more and more vendors are allowing customers to buy products with Bitcoin directly, both online and offline.
For example, in March, the Kessler Collection, a hospitality brand, announced it would accept cryptocurrency as payment for its eight luxury hotels.
Even more notably, last year, PayPal added the ability to buy, hold, and sell cryptocurrency through its platform. This year, PayPal’s Checkout will convert Bitcoin and other major cryptocurrencies into U.S. dollars when making purchases to roughly 29 million of its online merchants. Although this feature is not yet available to Canadian customers (PayPal intends to expand the service to other global markets later this year), it speaks to the gaining momentum and acceptance of cryptocurrency in markets today.
While many people are interested in cryptocurrency, actually buying or investing in Bitcoin has historically been a bit of an obstacle for the average person. Essentially, there are two ways you can own Bitcoin. You can buy and hold Bitcoin via a digital wallet either held directly by you or that is hosted on a cryptocurrency exchange. Or you can get exposure to Bitcoin in a more familiar way through a publicly traded vehicle, such as an ETF or a closed-end fund, where the custody is abstracted away in the background. With any investment, understanding the risks and aligning the potential reward with desired outcome is critical.
Cryptocurrency in a digital wallet may not be for everyone. The main advantage of buying Bitcoin through an ETF is that you benefit from the diversification and growth potential of the world’s most popular cryptocurrency in an efficient, liquid ETF. With an ETF, you don’t have to worry about self-managing a digital wallet, and trading is as simple as buying and selling shares of your stock. Bitcoin ETFs may also be eligible for registered accounts, so you can use your TFSA or RRSP to hold Bitcoin in a tax-efficient manner. Despite many companies filing proposals, regulators in the United States have not yet approved any true Bitcoin ETFs for launch, leaving Canada as the only place in North America to invest in Bitcoin ETFs. As of today, Canadian investors have 4 Bitcoin ETF providers with others on the way: Purpose ETFs, Evolve ETFs, CI Galaxy ETFs, Horizons ETFs.
Purpose Bitcoin ETF (BTCC), the world’s first Bitcoin ETF backed by physically settled Bitcoin, was launched in Canada in February 2021 and exactly one month later crossed CA$1 billion in assets under management, emphasizing investors’ desire for convenient, safe access to cryptocurrencies and interest in the ETF as the premier vehicle for that exposure. Our Bitcoin ETF is listed on the Toronto and Montreal Stock Exchanges and eligible for registered TFSA or RRSP accounts. It is built to match the ever-changing needs of investors and provide access to Bitcoin to the masses, whether you invest yourself or through an investment advisor.
Two months after launching our Bitcoin ETF, we launched the world’s first Ether ETF on April 20, 2021. Ether is the second-largest cryptocurrency by market value. The Ethereum blockchain powers thousands of decentralized applications, like U.S. dollar stablecoins, decentralized finance, non-fungible tokens, and decentralized autonomous organizations.
For further information about Bitcoin and cryptocurrency investments, please check out the following articles: Cryptocurrency Basics & the Investment Opportunity, Cryptocurrency investing, 9 facts investors should care about, No Pickaxes Needed: Bitcoin Mining Explained, and What is a Bitcoin ETF and why it's the best option for Bitcoin investors.
— Josh Bubar is Vice President of Product at Purpose Investments.
All data sourced to Bloomberg unless otherwise noted.
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