If you’ve followed headlines about bitcoin and ethereum, you know cryptocurrencies and the broader crypto asset class have experienced dramatic swings. Like other investments, crypto goes through boom-and-bust cycles. From late 2021 to late 2022, the total crypto market capitalization fell from roughly $2.7 trillion to about $850 billion (all figures in U.S. dollars), which hit Canadian crypto investors hard.
That trend changed in 2023. Despite a few high-profile scandals, the year has seen renewed interest and recovering prices. Bitcoin (BTC), for example, rose from about $16,500 at the start of the year to roughly $41,300 as of Dec. 18, 2023 — an increase of about 150%. These moves raise important questions for investors: Is crypto too volatile for conservative portfolios? Should Canadian investors consider adding some crypto exposure, or avoid the hype altogether?
What are cryptocurrencies? A quick refresher for Canadian investors
Cryptocurrencies are digital forms of money built on blockchain technology, which records transactions securely and immutably in a distributed ledger. Unlike fiat currencies, crypto is not issued, managed, or backed by banks. Bitcoin runs on a global network of computers, called nodes, that execute algorithms to create new coins, process transactions and maintain the decentralized ledger.
Historically, Canadian investors bought whole coins or fractions of coins through crypto exchanges. Today, crypto is also accessible through exchange-traded funds (ETFs) that hold bitcoin or ethereum, making it easier for a wider range of investors to gain exposure without handling the coins directly.
The potential benefits of investing in crypto
Many Canadian investors remain cautious because cryptocurrencies are highly volatile. Still, crypto is increasingly considered an asset class by some long-term investors. Some ETF providers now include small crypto allocations within diversified funds—typically a modest 1% to 3% exposure—so investors can participate in potential upside while limiting direct exposure and operational complexity. Potential benefits include:
Diversification and hedging against traditional markets
Traditional diversification typically mixes equities and fixed income. Over recent years, bonds and some stock sectors have faced pressure from rising interest rates and inflation concerns, prompting investors to look for alternative diversification strategies. Crypto can provide a different risk-return profile because it is driven by distinct factors and technologies. That said, crypto also carries unique risks, including regulatory uncertainty, cybersecurity threats and technology failures, which investors must evaluate before allocating capital.
Potential for higher returns
Equities have historically driven growth in diversified portfolios, but over the last decade crypto has delivered considerable returns for those who timed the market well. Even a small allocation—often cited as 1% to 3%—can, in theory, boost portfolio returns when crypto performs strongly, while limiting downside if volatility returns.
A stake in the future of finance
A modest allocation to crypto provides exposure to technologies and financial models that could shape the future of money and investing. No one can be certain how large the crypto market will be in 10 years or what role specific tokens will play. Small, professionally managed allocations inside ETFs let investors participate in that potential without taking on custody or technical responsibilities themselves.
Pure crypto ETFs vs. all‑in‑one ETFs
Some ETFs invest almost entirely in bitcoin or ethereum, offering concentrated exposure that can be more volatile. Other funds, often marketed as “all‑in‑one” or “balanced” ETFs, include a small crypto position—commonly 1% to 3%—within a diversified mix of equities and fixed income. For investors seeking simple, diversified exposure with only a minor crypto weight, an all‑in‑one ETF can be an attractive option. More experienced investors who want to control their crypto allocation directly can choose a dedicated crypto ETF that holds predominantly one digital asset.
Below is an example allocation mix for a family of all‑in‑one ETFs and a dedicated crypto ETF, showing how a small crypto allocation fits into a broader portfolio strategy.
| All-in-One ETFs | Crypto-Asset ETF | ||||
| Fidelity ETFs | Conservative | Balanced | Growth | Equity | Fidelity Advantage Bitcoin ETF |
| Ticker | FCNS | FBAL | FGRO | FEQT | FBTC |
| Equity | 40% | 59% | 82% | 97% | 0% |
| Fixed income | 59% | 39% | 15% | 0% | 0% |
| Crypto | 1% | 2% | 3% | 3% | 99.83% |
How to buy all‑in‑one ETFs that include crypto
If a modest crypto allocation aligns with your goals, there are two common ways to access all‑in‑one ETFs:
- Through a financial advisor: An advisor can assess whether an ETF that includes a small crypto allocation fits your risk tolerance, time horizon and overall plan, and can recommend the appropriate holding and allocation.
- Via an online brokerage: All‑in‑one ETFs are available through major online brokerages. If you use an online broker, search for the ETF by ticker symbol and follow your usual order process.
Discipline is essential when investing. Only invest in ETFs that match your financial needs and risk tolerance. For some investors, managing a direct crypto allocation may make sense; for others, a small, professionally managed exposure inside an all‑in‑one ETF simplifies stewardship and can help prevent emotional decisions during volatile markets.
Read more about investing:
- How many ETFs can Canadian investors own?
- What investments can I put in my TFSA?
- ETFs and RESPs: It’s always a good time to invest in education
- Building a “core and explore” portfolio with an all‑in‑one ETF
- Five ways to worry less about your investments with an all‑in‑one ETF
This article is sponsored.
This is a paid post that provides information about a client’s product or service. The content was produced by MoneySense and approved by the client. It is intended to inform, not to provide personalized financial, tax or legal advice.
Commissions, trailing commissions, management fees, brokerage fees and other expenses may be associated with investments in ETFs. Please read an ETF’s prospectus for detailed investment information before investing. Rates of return shown are historical annual compounded total returns for the indicated period, including changes in unit value and reinvestment of distributions, and do not account for sales, redemption or other charges, or income taxes payable by investors. ETFs are not guaranteed. Values change frequently and investors may experience gains or losses. Past performance may not be repeated.
Management fees directly payable by certain all‑in‑one ETFs may be nil, but these ETFs typically invest in other underlying ETFs that charge management and/or administration fees. Based on underlying weightings, effective indirect management and administration fees will vary by fund and may be higher or lower than estimates due to rebalancing or changes in portfolio composition. Actual indirect fees are reflected in the management expense ratio, which is posted periodically.
Each all‑in‑one ETF described maintains a neutral mix that includes a small allocation to a bitcoin ETF (ranging between about 1% and 3%). Portfolios will be rebalanced if allocations deviate significantly from target ranges; rebalancing may not occur immediately but will be performed shortly after thresholds are crossed.
Information in this article is believed to be reliable and is provided for informational purposes only. Where information originates from third parties, accuracy and completeness cannot be guaranteed at all times. This content is not an offer or solicitation to buy securities. Investors should evaluate investment strategies in light of their own objectives and risk tolerance.
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