Are Crypto ETFs Safe Investments in 2022?

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February 2021 was a notable month for TSX, as it launched the world’s first Bitcoin Exchange-traded funds (ETF) for ordinary investors. after Purpose of Bitcoin ETFs (TSX: BTCC.B) debuted on the market on the 18th, Bitcoin ETF Evolving (TSX: EBIT) to follow the next day.

In April 2021, the primary Canadian stock market index entered history again with the emergence of three Ether ETFs. The purpose of the Ether ETF (TSX: ETHH), CI Global Asset Managements’ CI Galaxy Ethereum ETF, And Evolve ETF (TSX: ETHR) Trading started on the 20th.

The launch of Bitcoin and Crypto ETFs on TSX fulfills the desire of Canadian investors to be a part of the crypto craze. However, these ETFs are not necessarily profitable investments compared to the high-performing individual stocks.

high volatility sign

Bitcoin is the most popular cryptocurrency in the world, while Ethereum It is the second highest cryptocurrency in space. While Bitcoin crossed the $1 trillion market cap threshold in 2021, Ether was the best performer among the largest cryptocurrencies (+407% vs +60%).

On January 6, 2022, Bitcoin dropped below $42,000 for the first time since July 31, 2021. Crypto started weak until 2022, dropping 12.4% from the first day of the month. Also, the highly volatile nature appeared again, as evidenced by the sudden crash in December 2021.

Since playing directly in the cryptocurrency market can be very risky, cryptocurrency ETFs are options for casual investors. You can buy it and trade it like a common stock.

investment purpose

Purpose Investments is the company behind the Purpose Bitcoin ETF and Purpose Ether ETF. When you invest in any exchange-traded fund (ETF), you are getting rid of security or custodian concerns, because you don’t need a digital wallet. However, investing in BTCC.B and ETHH is the real deal, says Purpose Investment.

You are buying physical Bitcoin or Ether with your money, even though the actual stablecoin cryptocurrencies are kept securely in cold storage. Furthermore, both ETFs are eligible investments in a Tax-Free Savings Account (TFSA) and Registered Retirement Savings Plan (RRSP).

When Purpose Investments launched its first ETF, the company said it was a high-risk investment, consistent with the unstable nature of bitcoin. Purpose further added that the ETF is suitable for investors who want long-term capital growth but can take on high risks.

development

Evolve is one of Canada’s fastest growing ETF providers and specializes in bringing thematic ETFs to Canadian investors. Two of its products in the cryptocurrency world are the Bitcoin ETF and the Ether ETF. Like purpose ETFs, European EBIT and EBIT are eligible investments in the TFSA and RRSP.

ETFs invest directly in Bitcoin or Ether. Their common investment objective is to provide investors with exposure to the daily price movements of digital currencies (in US dollars). As of January 7, 2022, assets under management (AUM) from EBIT and ETHR were $137 million and $118 million, respectively.

Evolve wants to make it clear that investors in crypto ETFs should have the ability to absorb the loss of some or all of their investment.

Ether ETFs are better performing

In 2021, Ether ETFs outperformed Bitcoin ETFs. ETHH and ETHR investors’ gains in eight months were 33.21% and 59.21%, respectively. BTCC.B and EBIT investors who took positions since the market came out lost 11.79% and 16.08%, respectively.