TL;DR:
- Culper Research disclosed a short in ETH and ETH-linked securities, arguing Ethereum’s tokenomics deteriorated after the December 2025 Fusaka upgrade.
- The firm says gas fees fell 90%, hurting validator economics, while post-upgrade address and transaction growth was inflated by dusting and poisoning.
- Culper also tied its bear case to Vitalik Buterin’s announced ETH sales, claiming leadership sees more downside than bulls admit for now in public markets.
Culper Research has disclosed a short position in ether and ETH-linked securities, arguing that Ethereum’s economics worsened after the December 2025 Fusaka upgrade. In its public thread, the firm said ETH “is going lower” and paired that view with claims that Vitalik Buterin’s recent selling reinforces the bear case. The setup is striking because a high-profile short built around tokenomics and insider-style signaling reframes the Ethereum debate away from price action alone. At press time, ETH traded at $2,080, leaving the market to weigh whether Culper has identified a structural problem or an aggressive narrative.
NEW: We are short Ether $ETH, and ETH-linked securities, incl. $BMNR.
We think ETH tokenomics are impaired following the December 2025 Fusaka upgrade. Vitalik knows it and is selling, while $ETH's most ardent bull, Tom Lee, is throwing good money after bad.$ETH is going lower. pic.twitter.com/WQnQVJWkED— Culper (@CulperResearch) March 5, 2026
Culper’s bear case after Fusaka
Culper’s core argument is that Fusaka’s L1 scaling changes broke Ethereum’s fee dynamic more severely than expected. The firm pointed to a gas-limit increase from 45 to 60 million, saying the goal was to scale the base layer while leadership expected modest fee declines. Culper says the real outcome was harsher: gas fees dropped 90%. In that framing, fee compression becomes the engine of the short thesis, because lower fees ripple through validator economics, weaken staking incentives and challenge the idea that higher activity signals institutional demand for ETH.
Culper also rejects the bullish interpretation of post-upgrade activity. It argued that the rise in active addresses and transaction counts does not reflect healthier utility, but cheaper blockspace enabling low-value address poisoning and wallet dusting. Based on its analysis from January 2025 through February 2026, the firm claimed 95% of growth in new wallets came from created dusting wallets, that poisoning attacks more than tripled, and that poisoning explains over 50% of transaction growth. In Culper’s telling, headline activity masks deteriorating quality, turning growth metrics into evidence for weakness rather than resilience across the network.
The firm then tied that tokenomics argument to Buterin’s sales. Culper said Buterin pre-announced on Jan. 30 that he would sell 16,384 ETH to fund the Ethereum Foundation’s “austerity period,” and claimed he has since sold more than 19,300 ETH. Culper framed those moves as informed selling, not routine treasury management, while broadening the case into a competition narrative that pits ETH against Solana and Ethereum’s L2s. For now, Buterin’s selling becomes the emotional center of the short call, because it suggests leadership may understand the post-Fusaka pressure better than the market’s committed bulls do.
