Culper Research announced a short position in ether and ETH-linked instruments Thursday, arguing that Ethereum’s post-Fusaka economics have weakened enough to create sustained downside pressure. The firm posted the trade on X and said the December 2025 Fusaka upgrade, combined with recent sales by Vitalik Buterin, signal that “ETH is going lower.”
The firm’s thesis centers on changes to L1 capacity introduced by Fusaka. Culper says a gas-limit increase from 45 million to 60 million, intended to scale the base layer, had a far larger effect on fees than developers expected. Where the market anticipated a 10–30% drop in fees, Culper estimates fees fell roughly 90%, and claims protocol stakeholders misjudged demand elasticity by a factor of 3–9x using assumptions that predate EIP-1559 and the rise of L2s.
That fee compression, Culper argues, has material consequences for validator returns and staking demand. With lower tips per gas, validators are seeing what the firm describes as 40–50% declines in tip-derived income, which it says will reduce incentives to stake, depress high-value activity, and weaken institutional adoption narratives. “The flywheel is now running in reverse,” the firm wrote.
Culper singled out prominent bullish voices and ETH-linked products, including Tom Lee and BMNR, pushing back on their interpretation of post-Fusaka on-chain activity. Lee has pointed to increases in active addresses and transactions as evidence of rising utility and adoption. Culper contends much of that growth is not organic: instead it stems from low-value address poisoning and wallet dusting made cheaper by expanded blockspace.
Using on-chain data from January 2025 through February 2026, Culper reports that 95% of new-wallet growth can be explained by newly created “dusting” wallets. The firm says poisoning incidents have more than tripled, now account for over half of ETH transaction growth, and represent about 22.5% of all ETH transactions. As a simple check, Culper says it created two fresh wallets, transferred funds between them, and was targeted by poisoning attempts within five minutes. It also estimates poisoning-related losses are pacing more than eight times higher than before Fusaka.
Culper links these tokenomics concerns to large-scale selling by Ethereum’s co-founder. The firm notes that on January 30 Vitalik pre-announced a planned sale of 16,384 ETH to fund the Foundation’s so-called “austerity period,” and says he has since sold more than 19,300 ETH. Culper interprets those moves as informed selling that reflects an understanding of the new economics, arguing that Buterin “knows what Tom Lee doesn’t.”
The short case also includes competitive pressures: Culper says ether is ceding share to fast-growing alternatives like Solana and to Ethereum’s own layer-2 networks, likening the dynamic to past cycles in which dominant platforms lost ground as new architectures emerged.
At the time of the report, ETH was trading around $2,080. Culper’s position and its data-driven claims add the latest voice to a broader debate about whether on-chain metrics after Fusaka reflect genuine utility or are distorted by lower-cost, low-value activity.