Bitcoin & Crypto Stock Market ETF Investor Guide

I’m Scott McGregor, @Scottrades on Twitter; this is the Hot Wallet Podcast. 

Bitcoin is one of the best-performing major asset classes in 2023. So it’s a big surprise that one of the biggest ETF providers and investment management firms VanEck, announced last week the closure and Liquidation of their Digital Asset Mining ETF, the Stock Ticker for this ETF is DAM. 

The Fund holds mainly Bitcoin Miners, like Marathon Digital, Hut 8, Riot Blockchain, Cleanspark, Hive and others but only has about a Million Dollars of these stocks in terms of Assets Under Management so, big picture is not that big of a deal. 

There are actually a lot of ways to get Bitcoin and Crypto Exposure I’ll give you some of the tickers that I look at here in a minute, so stick around for that. 

The Digital Asset Mining ETF closure comes after an over 120% move since January. 

Vaneck says they continuously monitor and evaluates its ETF offerings across a number of factors, including performance, liquidity, assets under management, and investor interest, among others. The decision was made to liquidate the Fund based on an analysis of these factors. 

This is not the only Blockchain based ETF from Vaneck, this is just one focused directly on Mining and so the narrow focus could be the main reason for the closure and liquidation. 

VanEck goes on to say Shareholders of the Fund may sell their shares on the Fund’s listing exchange until market close on April 24, 2023 The Fund’s shares will no longer trade on the listing exchange after market close on April 24, 2023, and the shares will subsequently be de-listed. Shareholders who continue to hold shares of the Fund on the Fund’s liquidation date, which is expected to be on or about May 1, 2023, will receive a liquidating distribution of cash in the cash portion of their brokerage accounts equal to the amount of the net asset value of their Shares.  

So with one less ETF how can active investors interested in Bitcoin and Blockchain get broad-based exposure in the stock market…well there are a few ways. Canada was actually one of the first places to offer Bitcoin ETFs in the world through Purpose Investments. It was approved in March of 2021 and was hailed as a milestone moment for the industry. Canada also has a Bitcoin ETF that its providers say is Carbon Neutral. I’ll tell you about that as well. 

Before I go further, I want to remind you that non of this information should be considered Financial advice and you should speak to a financial expert before making any decisions. I am not suggesting that anyone Buy any of these securities, I simply want to make you aware that they exist. I’d also like to ask you to leave a 5-star review of this podcast and be sure and press follow on whatever platform you’re getting this on. 

In terms of trading Bitcoin and getting Digital asset exposure on the stock market…

The Grayscale Bitcoin Trust has to be mentioned. They have over 19 Billion Under Management and focus solely on Bitcoin. It trades in the Over The Counter or OTC Market, and basically, for every share you buy, you own a corresponding amount of Bitcoin. Sounds great, but because it trades OTC, there are some accounts that don’t allow you to trade in that pond, and so the barrier to entry can be hard for those specific investors. While Grayscale is trying to upgrade their Trust to a real Spot EFT, this is currently hung up in the U.S. Court System, and we don’t know if this show of force is going to come to a conclusion, so we’ll stick to the Major Exchange listed vehicles for the most part. 

One of the easiest ways to Trade Bitcoin on the stock market, in my opinion, is by using the ProShares Bitcoin Strategy ETF. This is a Futures-based ETF and it is very Liquid. It can typically trade well over a Million Shares a Day. I like this one more than something like the Grayscale Bitcoin Trust because it trades a bit more orderly. Major Institutions want liquidity, and BITO has lots of it, with over 700 Million in terms of assets under management. 

VanEck has its own Futures-based ETF as well, and its ticker XBTF. Vaneck says this is for anyone who seeks capital appreciation by investing in Bitcoin futures contracts. The Fund is actively managed and offers exposure to bitcoin-linked investments through an accessible exchange-traded vehicle. The Fund does not invest in Bitcoin or other digital assets directly. The problem I see with this ETF is that it doesn’t trade a lot. There can be over 1 hour of time go by before another trade is made, so it’s a bit of a sleepy ETF. 

The Global X Blockchain ETF is another Option. Though it doesn’t trade as many shares per day, they do have over 70 Million Dollars in terms of assets under management and holds stocks like Marathon Digital, Square, Coinbase and Riot Platforms. So there’s a mix of fin-tech and Bitcoin Mining. The ticker for that one is BKCH.

The Amplify Transformational Data Sharing ETF is another one that I’ve personally traded in the past. Its ticker is BLOK. That has just over 23 Million shares outstanding and over 400 Million Dollars in assets under management. Since January BLOK is only up 30% on the year so this one has underperformed some of the others, but it gives you exposure to Microstraedgy, Coinbase, some Bitcoin miners, but also a Mix of stocks like the CME Group, Visa, Mastercard, Oracle, and AMD. They also hold shares of some of the Canadian Bitcoin ETFs like the Purpose Bitcoin ETF, and 3IQ’s Coinshares Bitcoin ETF so, if you’re unable to buy some of the Canadians, this one trades on the New York Stock Exchange. 

I should also give an honorable mention to Bitwise.  They have an ETF called the Bitwise 10 Crypto index fund. From their website, they say: that BITW is a secure way to get diversified exposure to Bitcoin and leading cryptocurrencies. The Fund seeks to track an Index comprised of the 10 most highly valued cryptocurrencies, screened and monitored for certain risks, weighted by market capitalization, and rebalanced monthly. The fund provides the security and simplicity of a traditional investment vehicle, with shares tradable in brokerage accounts using the ticker “BITW.” They have over 500 Million in Assets under management. However, much like the Grayscale, This trades Over the Counter, and some people aren’t comfortable with that. 

So despite VanEck closing down their Bitcoin Miner ETF as you can see there are tons of different ways to see exposure to the space via the stock market if that’s something you choose to do. 

Valkyrie Funds also have a Bitcoin Mining ETF with the ticker WGMI, it has your typical players, like Riot and Marathion, inside sprinkled with some Semi-conductors stocks like NVDA. AMD and INTEL. 

Now if these are too focused on Crypto for you, you could also consider something like Ark Invests, ARK Innovation ETF, ticker ARKK, which has Coinbase alongside things like Tesla, Zoom Video, Shopify and Roku. Or their FinTech ETF, ARKF, which also has Coinbase and Shopify but also has Block and DraftKings as some of their biggest holdings. 

You could also look into the Global X Internet of Things ETF ticker SNSR; it’s more of an internet Infrastructure type trade, and it holds stocks like IBM and Semi conductors stocks like Skyworks and Rambus. I’m getting a bit in the weed here, but you get the idea.

If you’re a Canadian, you have the ability to trade real-life Bitcoin Spot ETFs on the Toronto Stock Exchange. 

As I mentioned, the first one in the world was the Purpose Bitcoin ETF, ticker BTCC. They have a 1% Management Fee and as of the recording of this podcast, have just over 24000 Bitcoin held in Cold Storage. They also have one for Ethereum. 

Evolve ETFs has some Spot Crypto ETFs as well, one for Bitcoin with the ticker EBIT, which follows the daily price of Bitcoin. It’s all held in Cold Storage. They have one for Ethereum ticker ETHR, with just over 57 Million Dollars worth at the time of this recording. And then they have one that is a mix of both but Weighted towards Bitcoin, and its ticker is ETC on the TSX. 

3iQ Also has a Spot Bitcoin ETF traded in Toronto under the ticker BTCQ. They say their ETF gives you 100% Bitcoin Exposure and it looks like they have about 300 Million Dollars worth of BTC in the fund. They, too, have an Ethereum Fund ticker ETHQ and for accredited investors have a Multi-asset fund that has Bitcoin, Ethereum, Solana, Cardano, and some other Top Tokens. 

The Fidelity Advantage Bitcoin ETF is another Option. It’s ticker FBTC on the Toronto Stock Exchange. They oversee about 44 Million Dollars worth of Bitcoin, held in cold storage, but has relatively low fees. Fidelity is of course, one of the biggest asset managers in the world, who has Trillions of Dollars under management, so the fact that a major player like Fidelity has not only an ETF but an entire team dedicated to Digital Assets is a huge endorsement for the legitimacy of the sector. 

Another Canadian Bitcoin ETF comes from Ninepoint. Its Ticker on the Toronto Stock Exchange is BITC, and it aims to follow the price movement of BTC as well. They have a management fee of less than 1%, and BITC is An environmentally-friendly way to buy Bitcoin. Ninepoint offsets 100% of the carbon footprint entirely from its management fee. Investors don’t pay any extra for that Green Initiative.  

ETFs are a great way for retail investors to get broad-based exposure to various sectors that they’re interested in without having to be a stock picker. There are still risks, and in some cases, Fees attached to owning ETFs and those vary based on the provider. You should do your own research before buying an exchange-traded fund because there are pros and cons. For those who want more direct exposure to Bitcoin and other Digital Assets, I like owning the assets in a hardware Wallet or active Hot Wallet. But you need to make that decision on your own, I am not a financial advisor. Please don’t sue me. 

I want to thank you for sharing your time with me, and I hope this was helpful. If it was, please do me a solid and Follow The Hot Wallet Podcast wherever you’re listening to this. Check out our website at HotWallet.ca and search for Hot Wallet Podcast on Youtube, Instagram and Twitter. 

My name is Scott McGregor, @Scottrades on Twitter. See you next time.