Long-time holders of Bitcoin, often dubbed “OGs” (original gangsters) of the crypto world- are reportedly moving significant holdings off the chain and into exchange-traded funds (ETFs). According to research from Uphold’s head of research, Dr. Martin Hiesboeck, the motivation appears two-fold: to gain tax advantages from the nascent spot Bitcoin ETF structure and to diversify into broader blockchain-and-crypto exposure.
The Shift: Selling Bitcoin, Entering ETFs
Hiesboeck notes that many longtime Bitcoin holders are choosing to “sell up” their holdings and then re-enter exposure in the form of ETFs, which he describes as offering “incredible tax advantages with current rules, especially in the US.”
One illustrative example is early Bitcoin arbitrage trader Owen Gunden, who recently moved his final tranche of 3,549 BTC – part of an original stash of about 11,000 BTC – to an exchange. Beyond him, the research highlights that dormant or “sleeping” whales are stirring. One “Satoshi-era” whale holding some 80,000 BTC had been inactive for 14 years, then began moving coins this year.
Why Now: Maturity, Tax Optimization, and Diversification
Hiesboeck interprets this behaviour as part of several broader trends:
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Maturing asset profile: He notes that Bitcoin’s compound annual growth rate (CAGR) over the last four years has been steadily declining and recently dropped into the low-teens. That suggests Bitcoin is shifting away from being a high-growth speculative asset toward being used more as a hedge against fiat-system risk.
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Institutionalisation and ETF influence: With the launch of spot Bitcoin ETFs, capital flows are increasingly institutional and likely less volatile than retail-driven. That tends to dampen extreme swings and reduce growth volatility, reinforcing the idea that Bitcoin is becoming a more “stable” asset class within crypto.
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Tax-advantage play: The tax benefits tied to certain investment vehicles- like ETFs, appear to be a strong pull for holders who are seeking more efficient ways to remain “in the game” while realising part of their gains.
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Diversification into blockchain and alt-projects: Hiesboeck also says many OGs have realised that while Bitcoin remains foundational, the real opportunity may lie in the broader blockchain ecosystem: “The real revolution isn’t Bitcoin but Blockchain, which is being used in every industry.”
Implications For the Market and For Holders
This shift has several important implications:
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Increased ETF inflows: As long-term holders offload and pivot into ETFs, this could mean increased demand for regulated products and further legitimisation of crypto in mainstream portfolios.
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Bitcoin’s role evolving: If Bitcoin is indeed moving more toward a hedge‐style role rather than ultra-high growth, the market may begin to treat it more like gold or a store of value, with lower expected return but also lower volatility. Hiesboeck stresses that the goal for a maturing asset is that “its volatility… also decline.”
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Wider distribution of Bitcoin: As older holders sell or move, newer participants may step in- broadening ownership and potentially reducing concentration risk. Macro analyst Jordi Visser suggested earlier this month that we may be seeing original holders rotating out while new traders enter, thereby widening distribution.
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Shift in mindset: Former “maximalist” attitudes that positioned Bitcoin above all other crypto projects may be fading. Hiesboeck says: “Do not be alarmed by some OG’s selling parts or all of their holdings. They are just growing out of adolescent maximalism.”
Risks and Considerations
While the transition offers potential benefits, there are also caveats:
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Tax rules vary: The “incredible tax advantages” that Hiesboeck refers to depend heavily on domicile (especially U.S. vs. non-U.S.), specific ETF product rules, cost-basis issues and timing of redemption. These nuances matter significantly for individual holders.
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ETF mechanics vs direct holdings: Holding Bitcoin directly differs from holding a Bitcoin ETF -differences include custody arrangements, counterparty risk, tracking error, and regulatory oversight. Some dedicated holders may prefer the direct route despite the tax drawbacks.
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Altcoin and blockchain project risk: While diversification into broader blockchain projects may look attractive, that space remains high risk – many projects still lack clear real-world use cases or profitability, and regulatory/regulatory scrutiny remains intense.
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Potential for legacy holders to take profits: If OG holders move to lock in gains, there is the possibility of downward pressure on Bitcoin’s price if broader market participation doesn’t fill the gap.
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Macro/regulatory environment: The crypto ecosystem remains highly sensitive to macro developments, regulatory actions (especially in the U.S.), and technological risks (forks, security breaches etc.). These could affect both ETFs and direct holdings.
What This Means for Retail Investors
For individual or retail crypto investors, the trends highlight several takeaways:
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Consider your tax position: If you are holding Bitcoin or other crypto assets and contemplating moving into ETFs or other regulated products, understand your local tax rules and how different vehicles are treated.
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Asset allocation matters: The notion of simply “holding Bitcoin and winning” may be evolving. Long-term investors may benefit from thinking not just in terms of one coin, but in terms of exposure to the broader blockchain economy.
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Still need conviction: Even if you shift to an ETF, you still need conviction in the underlying asset (or assets) and the regulatory and infrastructure framework.
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Watch for entry opportunities: As older holders rotate out, newer flows may come into the market- retail investors might find different entry points or changing dynamics in market liquidity and volatility.
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Balance risk and reward: Just because Bitcoin appears more “mature” doesn’t mean it’s risk-free. Reduced growth expectations may mean different returns, and diversification doesn’t eliminate risk.
Looking Ahead
As the crypto industry continues to evolve, the migration of Bitcoin “OGs” into ETFs and alternative blockchain exposures may mark a watershed moment- not just for individual portfolios, but for the structure of the market itself. If institutional ETFs gain more traction and diversified investment vehicles proliferate, older forms of crypto wealth accumulation (holding large sums of Bitcoin indefinitely) may give way to more sophisticated portfolio management.
The market’s next phase may not be about Bitcoin vs. altcoins, as Hiesboeck suggests. Instead, it may be about being part of a technology-driven ecosystem where blockchain underpins many industries.
For now, the signs are clear: some of the earliest and largest Bitcoin holders are stepping aside, not necessarily bowing out – but repositioning. And their strategy to leverage tax-efficient vehicles and diversify may well shape how the next generation of crypto capital flows.
