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BTCC: World’s first Bitcoin ETF launched in Canada

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Photo by Ewan Kennedy on Unsplash

The world’s first Bitcoin Exchange Traded Fund (ETF) began trading in Toronto Stock Exchange (TSX), Canada, on Thursday, Feb. 18, 2021, after receiving the regulatory approval ahead of the United States. The fund charges a 1% management fee and can be held in Canadian tax-free and registered accounts like RRSP, TFSA, or RESP [1].

The Bitcoin ETF, developed by Purpose Investments and approved by the Ontario Securities Commission, is trading under two tickers in Toronto Stock Exchange (TSX):

  • BTCC.B – Canadian dollar-dominated, non-currency hedged Bitcoin ETF
  • BTCC.U – US dollar-dominated Bitcoin ETF

Both Bitcoin ETFs showed strong demand on the first day of trading with 9.7 million shares of BTCC.B, the Canadian dollar-dominated, and 1.6 million shares of BTCC.U, the US dollar-dominated, exchanged hands on the market debut. Meanwhile, XIU, Canada’s TSX Composite Index ETF, and Vanguard’s S&P 500 Index ETF (VFV) only had a trading volume of 1.4 million and 0.145 million shares, respectively.

Strong momentum

BTCC.B, the Canadian dollar-dominated Bitcoin ETF, has gained 2.63% and currently trading at CAD$10.55. Furthermore, BTCC.U, the US dollar-dominated, showed better performance with a 4.4% gain and presently trading at CAD$10.57 in the Toronto Stock Exchange. In comparison, SPY, S&P 500 Index ETF, only showed a 0.05% gain for the same period.

The main benefit of buying the ETF than directly holding Bitcoin is to provide better liquidity and protection for investors with the risk of losing the password, keys, hard drive, and hacking. The ETF structure allows the fund manager to better track bitcoin price and reduces the premium pricing – every dollar entering the fund will consistently purchase a dollar worth of bitcoin.

Bitcoin will remain volatile and risky, but it provides a hedge or protection against inflation or an economic downturn similar to gold due to its limited supply. Meanwhile, many central banks like the Bank of Canada and the People’s Bank of China develop their own digital currency version [2].

Bitcoin and other private cryptocurrencies will remain one of many asset classes and provides a negative correlation against other financial assets. However, they will not be the dominating legal tender for making payments in the future as a government-issued digital currency will eventually take over.

The second Bitcoin ETF launched today under the symbol of EBIT and managed by Evolve Fund Group Inc.

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Written by Leonardo Hadi, P.Eng.,MBA
Quantitative hedge fund investor and Professional Engineer, holding an MBA from the University of Illinois at Urbana-Champaign Profile