XEQT vs Bitcoin & Crypto ETFs in Canada: Which Should You Own?

A few months ago, a coworker cornered me in the break room. He’d just seen another headline about Bitcoin hitting a new all-time high and wanted to know why I was “still buying boring ETFs” when crypto was clearly the future. He pulled up his phone, showed me his Bitcoin ETF position up 90% over the past year, and asked me if I felt like I was missing out.

Honestly? For about five seconds, I did.

Then I reminded myself that this same coworker had panic-sold his crypto holdings during the 2022 crash, locking in a 60% loss. He’d quietly gone back to GICs for a year before jumping back in at higher prices. His “90% return” was really more like breaking even when you accounted for the whole journey.

That conversation stuck with me because it captures exactly the tension many Canadian investors feel right now. Bitcoin and crypto ETFs are now easily accessible on platforms like Wealthsimple. They’re exciting. They make for great dinner-party stories. But should they actually be in your portfolio alongside (or instead of) XEQT?

Let’s break it down honestly.

1. What Crypto ETFs Are Available in Canada?

Canada was actually ahead of the curve on crypto ETFs. We had spot Bitcoin and Ethereum ETFs trading on the TSX well before the US approved theirs in 2024. That means Canadian investors have a solid lineup of options available through any major brokerage.

Here are the most popular crypto ETFs available to Canadian investors:

Bitcoin ETFs

• BTCX.B (CI Galaxy Bitcoin ETF) — One of the lowest-fee Bitcoin ETFs in Canada at 0.40% MER. Holds physical Bitcoin.
• FBTC (Fidelity Advantage Bitcoin ETF) — Fidelity’s entry into the space, offering a familiar brand name and solid custody infrastructure. MER of 0.44%.
• BTCC.B (Purpose Bitcoin ETF) — Canada’s original spot Bitcoin ETF, launched in 2021. MER of 1.00%. It was groundbreaking at launch, but fees are higher than newer competitors.
• EBIT (Evolve Bitcoin ETF) — Another option at 0.75% MER. Solid but not the cheapest.

Ethereum ETFs

• ETHX.B (CI Galaxy Ethereum ETF) — The most popular Ethereum ETF in Canada, with a 0.40% MER.
• ETHR (Evolve Ether ETF) — An alternative Ethereum option at 0.75% MER.

Multi-Crypto ETFs

• BTCX and ETHX also offer hedged and unhedged versions, so you can choose your currency exposure.

The important thing to understand: all of these are single-asset or at best two-asset products. A Bitcoin ETF holds Bitcoin. An Ethereum ETF holds Ethereum. That’s it. There’s no diversification within the fund itself.

Compare that to XEQT, which holds over 9,000 stocks across 40+ countries in a single ticker. The diversification difference is enormous.

2. The Head-to-Head Comparison

Let’s put the numbers side by side. This is what most people want to see, so here it is:

Returns are approximate and based on historical data up to early 2026. Past performance does not guarantee future results.

A few things jump out immediately:

• The return gap is real — Bitcoin ETFs have absolutely crushed XEQT on pure returns over the last year. No denying it.
• So is the volatility gap — A 65-80% annualized standard deviation means crypto can swing 5-10% in a single day. XEQT’s worst single-day drops are usually in the 3-5% range during genuine crises.
• The drawdown tells the real story — Could you hold through a 77% decline? Honestly? Most people can’t. That’s not a character flaw; it’s human nature.
• No income — Crypto generates zero dividends. XEQT pays a modest but growing distribution that can be reinvested automatically.

3. Volatility: The Number That Actually Matters

I want to dwell on volatility for a moment because I think it’s the most underappreciated factor in this comparison.

When people compare XEQT and Bitcoin, they usually look at returns. But returns only matter if you actually hold through the entire period. And holding through crypto’s volatility is genuinely brutal.

Here’s what crypto volatility looks like in practice:

• November 2021 to November 2022: Bitcoin dropped from ~$69,000 USD to ~$16,000 USD. That’s a 77% decline over 12 months. If you had $50,000 in a Bitcoin ETF, it was worth about $11,500.
• During that same period, XEQT dropped about 15%. A $50,000 XEQT position went to roughly $42,500.

Now, both recovered eventually. But ask yourself honestly: which scenario would you have been more likely to hold through? Which one would have kept you up at night?

I’ve talked to dozens of Canadian investors through this blog, and the pattern is always the same. The ones who bought crypto at the top and held through the crash are the exception, not the rule. Most people sold somewhere on the way down, locked in massive losses, and then watched the recovery from the sidelines.

With XEQT, a 15% dip feels uncomfortable but manageable. You can tell yourself “the global economy hasn’t collapsed” and keep buying. With a 77% crypto crash, you start questioning everything.

Volatility comparison by year

XEQT figures based on iShares reported NAV performance. Crypto figures based on spot prices in CAD.

Notice the pattern: crypto’s best years are spectacular, but its worst years are devastating. XEQT’s range is much tighter. Over a full market cycle, steady and boring wins the race for most investors because you actually stay invested.

4. The Correlation Argument (And Why It’s Complicated)

One argument you’ll hear for adding crypto to an XEQT portfolio is diversification through low correlation. The theory goes: Bitcoin doesn’t move in lockstep with stocks, so adding it reduces overall portfolio risk.

This was somewhat true before 2020. Bitcoin used to behave more like an independent asset. But over the last several years, something shifted. During major market stress events (like the COVID crash in March 2020 and the 2022 bear market), Bitcoin dropped right alongside stocks. In some cases, it dropped harder.

The correlation between Bitcoin and the S&P 500 has been rising, hovering around 0.4-0.6 during volatile periods. That’s not zero. It’s not even low enough to provide meaningful crisis diversification.

What does provide genuine diversification against stock crashes? Bonds, GICs, and cash. Not as exciting, but they actually hold their value when stocks fall.

The bottom line on correlation: Crypto adds some diversification during calm markets but tends to fall alongside stocks during the exact moments you’d want diversification the most. It’s a “fair-weather diversifier.”

5. Portfolio Allocation: How to Think About Sizing

Let’s say you’ve read all of this and still want some crypto exposure. I don’t think that’s unreasonable. Here’s how I’d think about sizing it within a portfolio.

The Core-Satellite Approach

The most sensible framework is treating XEQT as your core (80-95% of your portfolio) and crypto as a satellite (5-20% at most).

Here’s what different allocations might look like:

Conservative approach (95% XEQT / 5% crypto)

• You get a small taste of crypto’s upside
• A 77% crypto crash only impacts your total portfolio by ~4%
• You can sleep at night
• This is where I’d start if you’re curious about crypto

Moderate approach (90% XEQT / 10% crypto)

• Meaningful exposure to crypto returns
• A 77% crypto crash hits your portfolio by ~8%
• Still manageable for most investors with a long time horizon
• This is the maximum I’d recommend for most people

Aggressive approach (80% XEQT / 20% crypto)

• Significant crypto exposure
• A 77% crypto crash would drag your portfolio down ~15% from the crypto portion alone
• Only appropriate if you have a very long time horizon (15+ years), high risk tolerance, and stable income
• You need to be genuinely prepared to watch that allocation drop dramatically

What I personally do

I’ll be transparent: my own portfolio is about 95% XEQT and 5% in a Bitcoin ETF (BTCX.B). That 5% gives me enough exposure that I don’t feel left out during crypto bull runs, but small enough that I don’t lose sleep during crashes. I rebalance once a year and I don’t check the crypto allocation more than quarterly.

Is it optimal? Who knows. But it’s sustainable, and sustainable beats optimal every single time.

6. Who Should Own What? (Risk Profile Guide)

Not every investor is the same. Here’s my honest take on who should own what:

XEQT only (no crypto)

This is the right choice if you:

• Are building your first investment portfolio
• Have a time horizon under 10 years
• Would check your portfolio daily if it dropped 30%
• Don’t have a stable emergency fund yet
• Want a genuinely set-it-and-forget-it approach
• Are investing inside an RRSP or RESP where stability matters more

Honestly, this is the right answer for the majority of Canadian investors. There’s no shame in it. XEQT has delivered solid long-term returns with manageable volatility, and simplicity is an underrated superpower.

XEQT + small crypto allocation (5-10%)

This might make sense if you:

• Already have a solid XEQT portfolio of $50,000+
• Have a fully funded emergency fund (3-6 months of expenses)
• Have a 15+ year time horizon
• Understand that you could lose 50-80% of the crypto portion at any time
• Won’t panic-sell during a crypto winter
• Have maxed out (or are on track to max out) your TFSA and RRSP

Heavy crypto allocation (20%+)

I’d only consider this if you:

• Have a genuinely high risk tolerance (proven through past behavior, not just what you tell yourself)
• Are young (under 30) with decades ahead of you
• Have a high and stable income that lets you continue investing through crashes
• Understand blockchain technology and believe in the long-term thesis
• Won’t need this money for 20+ years
• Accept that this portion of your portfolio could go to near zero

A word of caution: Many people overestimate their risk tolerance. It’s easy to say “I’d hold through a 77% crash” when your portfolio is at all-time highs. It’s very different when you’re actually watching your money evaporate and every headline says crypto is dead. I’ve seen it happen to smart, rational people.

7. Crypto ETFs vs. Holding Crypto Directly

A quick sidebar: if you do decide to add crypto exposure, should you use an ETF or buy Bitcoin/Ethereum directly on a crypto exchange?

Advantages of crypto ETFs (like BTCX, FBTC, ETHX):

• Held inside your TFSA or RRSP (tax-sheltered!)
• No need to manage private keys or wallets
• Same brokerage as your other investments
• Regulated by Canadian securities laws
• Easy to rebalance alongside XEQT

Advantages of holding crypto directly:

• No MER (you avoid the 0.40%+ annual fee)
• True ownership — “not your keys, not your coins”
• Access to a wider range of cryptocurrencies
• Can participate in staking, DeFi, etc.

For most Canadian investors reading this blog, the ETF route makes more sense. The ability to hold crypto inside a TFSA alone is a massive advantage. Any capital gains inside your TFSA are completely tax-free. If you held the same Bitcoin outside a registered account, you’d owe capital gains tax on the profits.

The MER is a fair price to pay for tax sheltering, custody, and simplicity.

8. The Tax Angle: Why Account Type Matters

Speaking of taxes, the account you use matters a lot for crypto ETFs specifically because crypto’s returns (when they’re good) tend to be almost entirely capital gains. There are no dividends to complicate things.

TFSA: Ideal for crypto ETFs. All gains are tax-free. If your Bitcoin ETF doubles, you keep every penny.

RRSP: Also good. Gains are tax-deferred. You’ll pay tax when you withdraw in retirement, ideally at a lower tax bracket.

Non-registered account: Workable, but you’ll owe capital gains tax on any profits when you sell. For highly volatile assets like crypto, this can create complex tax situations if you’re rebalancing frequently.

My suggestion: If you’re going to hold a small crypto ETF position, put it in your TFSA. The tax-free upside on a volatile asset is the best possible scenario. Put XEQT in all your accounts as the core.

9. Common Mistakes to Avoid

I’ve watched Canadian investors make these mistakes over and over with crypto. Learn from them:

Mistake 1: Buying crypto instead of XEQT as your core

Crypto is not a substitute for a diversified portfolio. It’s a single, highly speculative asset class. Starting with XEQT gives you a foundation; crypto can be an addition later.

Mistake 2: Chasing past returns

The worst time to buy crypto is usually right after a massive run-up, which is exactly when most people get interested. If you’re only looking at crypto because it’s up 85% this year, you’re probably buying enthusiasm, not value.

Mistake 3: Allocating too much too fast

If you want crypto exposure, start small. Put 2-3% of your portfolio into BTCX.B and see how it feels during your first 20% drawdown. You can always add more later. You can’t undo a panic-sell.

Mistake 4: Constantly rebalancing

Crypto’s volatility means it will frequently drift from your target allocation. Rebalancing monthly is a recipe for high transaction costs and emotional exhaustion. Once or twice a year is plenty.

Mistake 5: Treating crypto as a short-term trade

If you’re buying a Bitcoin ETF hoping to sell it in three months for a quick profit, you’re not investing — you’re speculating. That’s fine if you know what you’re doing, but don’t confuse it with building long-term wealth.

10. The Bottom Line: Start With XEQT, Add Crypto Thoughtfully

Here’s my honest take after years of investing in both:

XEQT should be the foundation of every Canadian investor’s portfolio. It gives you instant global diversification, automatic rebalancing, rock-bottom fees, and a century of evidence that global equities build wealth over time. It’s boring, and that’s exactly why it works.

Crypto ETFs are an optional addition, not a replacement. They can add some return potential and a small diversification benefit, but they come with extreme volatility that most investors underestimate until they experience it firsthand.

If you’re just starting out, buy XEQT. Automate your contributions. Build a solid foundation. Once you have a meaningful portfolio and a genuine understanding of crypto’s risks, a 5-10% allocation to a low-cost Bitcoin ETF like BTCX.B is a reasonable move.

But if you never buy a single crypto ETF and just keep adding to XEQT every month for the next 20 years? You’ll almost certainly build serious wealth. I’ve never met a long-term, disciplined XEQT investor who regretted keeping it simple.

My coworker’s 90% return looks amazing on his phone screen. My XEQT portfolio’s steady growth doesn’t make for exciting break-room conversations. But I sleep well at night, I’ve never panic-sold, and I know exactly what I own. For me, that’s worth more than any moonshot.

Related Pages

• What Is XEQT?
• Is XEQT a Good Investment?
• Best ETFs to Pair with XEQT
• Can I Lose All My Money with XEQT?
• XEQT vs Individual Stocks: Which Strategy Wins?
• How to Automate XEQT Purchases on Wealthsimple