Culper Research announced a short position on Ether and ETH-linked securities on Thursday, claiming that Ethereum’s economics have worsened since its recent upgrade, putting sustained downward pressure on the token. The firm pointed to the December 2025 Fusaka upgrade and Vitalik Buterin’s recent sales as evidence that “ETH is going lower.”
In a post on X, Culper stated it is shorting Ether and related securities, including BMNR, arguing that ETH’s tokenomics are now impaired. The firm suggested that Buterin’s selling, alongside prominent bull Tom Lee’s continued support, indicates a fundamental problem.
The Core Argument: Broken Tokenomics
Culper’s main claim is that the Fusaka upgrade’s scaling changes, specifically a gas limit increase intended to lower fees by 10-30%, instead caused fees to plummet by roughly 90%. The firm argues this miscalculation, based on outdated pre-L2 models, has severely damaged validator economics by slashing their tip revenue by 40-50%.
According to Culper, these lower staking yields reduce incentives for validators and undermine the narrative of institutional adoption, causing Ethereum’s economic “flywheel” to reverse.
Disputing the Bull Case
The report directly challenges the bullish perspective, exemplified by Tom Lee’s argument that rising activity post-upgrade shows strengthening fundamentals. Culper counters that its on-chain analysis from January 2025 through February 2026 reveals this activity surge is not organic growth.
Instead, Culper claims 95% of new wallet growth is from “dusting” wallets, and that address poisoning attacks have more than tripled, now accounting for over 50% of transaction growth and 22.5% of all ETH transactions. The firm says it validated this by observing poisoning attacks on new test wallets within minutes.
Buterin’s Sales as a Signal
Culper also frames Vitalik Buterin’s recent sales—over 19,300 ETH since a pre-announced plan to sell 16,384 for the Ethereum Foundation—as informed selling based on broken tokenomics, rather than routine treasury management.
The firm concluded by broadening its bear case, suggesting Ethereum is losing market share to competitors like Solana and even its own Layer 2 networks, comparing ETH’s position to that of a disrupted incumbent.Ethereum led the early stages of the market before losing its top position. At the time of writing, ETH is trading at $2,080. The featured image was created with DALL·E, and the chart is from TradingView.com.
Frequently Asked Questions
Of course Here is a list of FAQs about Culper Shorts Ethereum framed around the news of Vitalik Buterins sales written in a natural conversational tone
Beginner Definition Questions
1 What is Culper Shorts Ethereum
Its an investment thesis or report from a research firm that recommends shorting Ethereum Shorting is a bet that the price of ETH will go down
2 Who is Vitalik Buterin and why does his selling matter
Vitalik Buterin is the cofounder of Ethereum When a major founder sells a significant amount of their own cryptocurrency some investors see it as a potential loss of confidence or a signal that the price might be near a peak
3 What does citing Buterins sales mean
It means the Culper report is using Buterins recent transactionswhere he sent ETH to an exchangeas a key piece of evidence to support their argument that Ethereums price will fall further
Intermediate Strategy Questions
4 Is Buterin selling all his ETH
No The sales reported are typically a small fraction of his total holdings However for a short thesis the action of selling is more important than the percentage as it may indicate his view on shortterm value
5 Besides Buterin selling what other reasons does Culper give for shorting ETH
While this specific report highlights Buterins sales similar short theses often cite high transaction fees potential regulatory pressure competition from other blockchains or a belief that Ethereum is overvalued relative to its current utility
6 Is shorting Ethereum the same as saying Ethereum is dead
Absolutely not Shorting is typically a shorttomediumterm trading bet on price direction One can believe Ethereums price will drop in the next few months while still acknowledging its longterm role in the crypto ecosystem
7 How would an ordinary investor actually short Ethereum
Average investors dont typically short directly They might use
Futures or options contracts on crypto exchanges
Inverse ETFs that track the opposite of ETHs daily performance