Culper Research has taken a bearish stance on Ethereum by initiating short positions, citing a decline in the altcoin's economic viability following the December 2025 network upgrade known as Fusaka. This update is reported to have led to an oversupply of block space, resulting in a staggering 90% drop in transaction fees, which directly impacts validator revenues and staking profitability.
Analysts express concerns that this situation could create a detrimental cycle: lower earnings from staking could diminish interest in locking coins, ultimately undermining the security of the blockchain itself. They reference Ethereum co-founder Vitalik Buterin's recent sale of approximately 20,000 ETH, valued at nearly $40 million, as a sign of waning confidence in the asset. "Vitalik is selling while bulls like Tom Lee fail to grasp the new reality of the asset. We side with Vitalik," the analysts noted.
Critics of Lee's optimistic views argue that the apparent increase in transaction volume is misleading, attributing a significant portion of it to "address poisoning," where spam transactions are used to clutter the network. Culper researchers assert that if Ethereum's utility stagnates, it may indeed be entering a 'death spiral.' The firm is also targeting BitMine, a major corporate buyer of Ethereum, which has amassed around 4.4 million ETH since July. However, with the recent price drop, the value of BitMine's holdings has plummeted by 45%, resulting in unrealized losses of approximately $7.5 billion for the company.
