The price of Bitcoin is near its all-time high. Some Canadian investors are increasingly looking for accessible and regulated ways to gain exposure to digital assets. One of the most popular investment vehicles emerging in this space is the Cryptocurrency Exchange-Traded Fund (ETF).

In this article, we will explore what a Crypto ETF is, the different types available, and the advantages of investing in them. We will also highlight some of the top Canadian crypto ETFs for 2024.

What is a Crypto ETF？

A Crypto ETF is a type of investment fund and exchange-traded product that aims to track the performance of a specific cryptocurrency or a group of cryptocurrencies. Much like traditional ETFs that track stock indices, a Crypto ETF allows investors to buy shares that represent fractional ownership of the underlying assets, without the need to directly purchase or manage cryptocurrencies. This structure provides an easier and more regulated way for investors to gain exposure to the volatile crypto market, while benefiting from the liquidity and convenience of trading on stock exchanges.

Types of Crypto ETFs

There are several types of Crypto ETFs available in the market, with the most popular being Crypto Spot ETFs and Crypto Futures ETFs.

Crypto Spot ETFs - Direct exposure

These ETFs provide direct exposure to a specific cryptocurrency by holding the actual coins. They are ideal for investors seeking a straightforward way to invest in crypto without the complexities of owning and storing the currency themselves.

Crypto Futures ETFs - A look into the future

Futures ETFs do not directly hold cryptocurrencies. Instead, they track cryptocurrency prices through futures contracts based on speculation about future prices.

Performance differences

Crypto Spot ETFs closely track the actual price of the underlying cryptocurrency, while Crypto Futures ETFs can experience different performance outcomes due to factors like market sentiment and time decay. This can lead to increased risks and volatility in Futures ETFs compared to Spot ETFs.

Benefits of investing in Crypto ETFs

Investing in Crypto ETFs offers a range of advantages that make them an attractive option for both new and experienced investors.

Easy to Trade: Crypto ETFs can be bought and sold just like stocks, making them simple to trade. This means you don't have to manage your own crypto wallets or worry about private and public keys.

Safe Custody: When you buy cryptocurrency directly from an exchange, you may need to store your security keys there, which can be risky due to potential hacks. With Crypto ETFs, you don't have to own any cryptocurrency or store keys. Large asset management companies have the necessary resources to protect crypto holdings from theft, ensuring a higher level of security for investors.

TFSA and RRSP Eligible: While cryptocurrencies cannot be held in registered accounts like a TFSA or an RRSP, crypto ETFs can be included in these accounts, offering important tax benefits for investors.

Top Canadian Crypto ETFs in 2024

Investors can choose from Bitcoin ETFs (which invest entirely in BTC), Ethereum (or Ether) ETFs (which invest solely in ETH), or multi-crypto ETFs that include both BTC and ETH. As of now, BTC and ETH are the only cryptocurrencies offered through ETFs.

The table below lists the crypto spot ETFs available in Canada, which can be purchased using Canadian dollars. (All figures are as of October 18, 2024, ranked by assets under management.)

Bitcoin ETFs:

1. Purpose Bitcoin ETF ( $PURPOSE BITCOIN ETF CAD ETF NON CURRENCY HEDGED UNIT (BTCC.B.CA)$ )

2. CI Galaxy Bitcoin ETF ( $CI GALAXY BITCOIN ETF CAD UNHEDGED ETF UNITS (BTCX.B.CA)$ )

3. Purpose Bitcoin ETF ( $PURPOSE BITCOIN ETF ETF UNIT (BTCC.CA)$ )

4. Fidelity Advantage Bitcoin ETF ( $FIDELITY ADVANTAGE BITCOIN ETF UNIT SER L CAD (FBTC.CA)$ )

Ethereum (ether) ETFs:

1. CI Galaxy Ethereum ETF ( $CI GALAXY ETHEREUM ETF ETF UNIT (ETHX.B.CA)$ )

2. Purpose Ether ETF ( $PURPOSE ETHER ETF ETF NON CURRENCY HEDGE UNIT (ETHH.B.CA)$ )

3. Purpose Ether Staking Corp. ETF ( $Purpose Ether Staking Corp. ETF (ETHC.B.CA)$ )

4. Purpose Ether ETF ( $PURPOSE ETHER ETF ETF UNIT (ETHH.CA)$ )

How to find Canadian Crypto ETFs on moomoo

Open moomoo and click on Markets > CA > ETF > Crypto ETF to discover Canadian Crypto ETFs available on moomoo.

On the detailed list page, you can sort the ETFs by factors such as price changes, trading volume, transaction value, and market capitalization.

Things to consider before investing in Crypto ETFs

Like any investment, there are inherent risks associated with crypto, and it's crucial to be aware of them. Investing a significant portion of your portfolio in ETFs that indirectly invest in crypto held by an investment firm can pose risks. Therefore, it’s essential to thoroughly research all potential investments while considering your personal risk profile. Some key risks to keep in mind include:

• Management Fees: Crypto ETFs often have higher expense ratios than traditional ETFs, which can impact overall returns.

• Transparency Issues: The ETF may lack transparency or reflect actual crypto prices inaccurately.

• No Direct Ownership: Investing in Crypto ETFs does not grant you actual ownership of the underlying cryptocurrencies.

• Crypto Price Risk: The value of cryptocurrencies can be highly volatile, with prices subject to rapid fluctuations due to market sentiment, regulatory news, and technological developments.