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Bitcoin recently surged past an all-time high of $111,000, and if you’re worried about buying the top, you’re not alone. For income-focused investors, the biggest drawback with Bitcoin has always been simple: it doesn’t produce any cash flow. You can only make money by selling it at a higher price, which makes it feel more like speculation than investment.
But that’s not the whole story anymore. Thanks to exchange-traded funds (ETFs) like the Purpose Bitcoin Yield ETF (TSX:BTCY.B), you can now get exposure to Bitcoin while earning income. As of now, this ETF pays a monthly distribution with a forward yield of 11.2%. Here’s how it works.
What is BTCY.B?
BTCY is an income-generating Bitcoin fund that takes a unique approach: it holds units of a spot Bitcoin ETF and then sells covered call options on those ETF units. This means it doesn’t hold Bitcoin directly.
Instead, BTCY owns shares of a fund that holds Bitcoin, and then layers on a call-writing strategy to generate income. The options are typically sold out-of-the-money, so the fund collects premiums without giving up all potential upside unless Bitcoin rallies sharply in a short period.
Because Bitcoin is extremely volatile, the premiums from these calls are rich. That’s how BTCY.B is able to deliver a trailing 11.2% distribution yield, paid monthly. The flipside is that the ETF will underperform spot Bitcoin in strong bull markets, since the calls cap how much price appreciation the fund can retain.
It’s not for everyone. But if you want Bitcoin exposure and a steady stream of income – think of it like harvesting gains every month – BTCY.B offers a balanced way to do both.
And because it’s an ETF, you can hold it in registered accounts like a Tax-Free Savings Account (TFSA), Registered Retirement Savings Plan (RRSP), or First Home Savings Account (FHSA) for tax-sheltered growth.
How much could I earn?
If you invested $10,000 in BTCY.B at a price of $10.84 per share, you could buy roughly 922 shares. Each share paid a monthly distribution of $0.085, so: 922 shares × $0.085 = $78.37 per month. Annualized, that works out to about $940.44, which lines up with the current 11.2% yield, all earned tax-free if held inside a TFSA.
That said, this isn’t a guaranteed income stream. The distribution can vary depending on how much premium the fund collects from call options. If Bitcoin volatility falls or the underlying ETF drops significantly, the yield may shrink.
Also, while the options generate income, they limit upside. So in a raging bull market, BTCY.B won’t match Bitcoin’s full return. But for income-focused investors who still want crypto exposure, it’s a trade-off worth considering.
