Culper Research disclosed a short position in ether and ETH-linked securities on Thursday, arguing that Ethereum’s post-recession economy has weakened enough to put continued pressure on the token. The company pointed directly to Fusaka’s December 2025 Ethereum development, and Vitalik Buterin’s recent sales, as evidence that “ETH is going down.”
“NEW: We are short Ether ETH, and securities linked to ETH, including BMNR,” Culper wrote on X. “We think ETH tokenomics is not working well after the December 2025 Fusaka development. Vitalik knows it and is selling, while the most enthusiastic ETH bull, Tom Lee, is throwing good money after bad.”
Why Culper is missing Ethereum
Culper’s main claim is that Fusaka’s L1 scale changes have made Ethereum’s demand curve more volatile than expected. The firm pointed out the limit of gas increase “45 to 60M” that he said it is intended to scale base layer Ethereum, aside estimates that “Vitalik and PTG” believe that the funds will decrease 10% to 30%. Culper argues that the result obtained was too harsh: “In fact, gas fees fell by ~90%,” he wrote, adding that Ethereum’s leadership and validators “incorrectly estimated that L1 needs to expand by 3-9x based on outdated calculations (pre-EIP-1559 and before L2s).”
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That financial pressure is important, Culper says, because it taps into the economics of confirmation and solid profits. “Furthermore, the increase in the gas limit has killed the $ETH validators, who are now seeing lower tips of 40-50% per gas,” Culper wrote, saying that the lower yield reduces the need for staking and “high value activity,” which undermines the institutional acquisition narrative. “The flywheel is now running in reverse.”
The series features Tom Lee and BMNR as a prominent counterweight to the ETH bull camp, and tries to break down his learning after the upgrade. Culper said Lee defended ether by saying: “ETH is not in a state of death because the utility is increasing.” According to Culper, Lee cited spikes in active addresses and transaction counts after Fusaka as evidence of “fundamental strengthening” and institutional acquisitions.
Culper’s rebuttal is vague and largely descriptive: “In Lee’s opinion, if ETH activity does NOT show more support and strengthening fundamentals, $ETH will be at risk of death,” he wrote. “Our research says this is what’s happening.”
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Explaining the increase in activity, Culper said his analysis of on-chain data from January 2025 to February 2026 suggests that most of the growth was not organic consumption, but a wave of low-value address pollution and wallet dust powered by cheap blockspace. “Post-Fusaka: 95% of new wallet growth is explained by newly created ‘dust’ wallets,” Culper wrote, adding that poisoning attacks “have more than 3x’ed,” that poisoning explains “>50% of ETH transaction growth,” and that it is now “22.5% of all ETH payments.”
Culper said he personally confirmed the incident, saying he set up two new wallets, transferred between them, and was the target of a poison attack “within 5 minutes,” while saying the poison loss was “>8x more than pre-Fusaka.”
Vitalik Sells
The company has also tried to integrate its tokenomics thesis into Buterin’s recent sales work, portraying it as information sales rather than traditional treasury management.
“That’s why, we think, Vitalik is selling a fistful of ETH. On January 30, Vitalik previously announced that he would be selling 16,384 ETH to fund the ‘bankruptcy’ of the Foundation. Since then, he has sold over 19,300 ETH and counting,” Culper wrote. “You know what Tom Lee isn’t doing: ETH tokenomics is broken.”
Culper closed by extending the bear’s case to the issue of competition, saying that ether is losing share to Solana and Ethereum’s L2, and likening the current position of ETH to the participants who led in previous periods before the expulsion.
At press time, ETH traded at $2,080.
The featured image was created with DALL.E, a chart from TradingView.com
