Culper Shorts Ethereum, Says Buterin Selling Signals More Pain Ahead

11 hours ago

Culper Research disclosed a abbreviated presumption successful ether and ETH-linked securities connected Thursday, arguing that Ethereum’s post-upgrade economics person deteriorated capable to enactment sustained downside unit connected the token. The steadfast pointed straight astatine Ethereum’s December 2025 Fusaka upgrade, and astatine Vitalik Buterin’s caller sales, arsenic grounds that “ETH is going lower.”

“NEW: We are abbreviated Ether ETH, and ETH-linked securities, incl. BMNR,” Culper wrote connected X. “We deliberation ETH tokenomics are impaired pursuing the December 2025 Fusaka upgrade. Vitalik knows it and is selling, portion ETH’s astir ardent bull, Tom Lee, is throwing bully wealth aft bad.”

Why Culper Is Shorting Ethereum

Culper’s halfway assertion is that Fusaka’s L1 scaling changes altered Ethereum’s demand-fee dynamic much dramatically than expected. The steadfast pointed to a state bounds summation “45 to 60M” that it said was intended to standard Ethereum’s basal layer, alongside estimates that “Vitalik and PTG” believed fees would driblet 10% to 30%. Culper contends the realized result was acold much severe: “In reality, state fees fell ~90%,” it wrote, adding that Ethereum’s enactment and validators “miscalculated L1 request elasticity by 3-9x based connected outdated mathematics (pre-EIP-1559 and pre-L2s).”

That interest compression matters, Culper argues, due to the fact that it ripples into validator economics and staking incentives. “Further, the gas-limit summation killed $ETH validators, who are present seeing 40-50% little tips per gas,” Culper wrote, claiming that little yields trim request for staking and “high-value activity,” undermining the organization adoption narrative. “The flywheel is present moving successful reverse.”

The thread frames Tom Lee and BMNR arsenic a salient counterweight successful the ETH bull camp, past attempts to dismantle his post-upgrade read-through. Culper said Lee has defended ether by claiming: “ETH is not successful a decease spiral due to the fact that inferior is going up.” According to Culper, Lee cited spikes successful progressive addresses and transaction counts aft Fusaka arsenic grounds of “strengthening fundamentals” and organization adoption.

Culper’s rebuttal is blunt and mostly definitional: “By Lee’s ain logic, if ETH enactment does NOT bespeak accrued inferior and strengthening fundamentals, past $ETH would beryllium successful a decease spiral,” it wrote. “Our probe says this is precisely what’s happening.”

To explicate the enactment surge, Culper said its investigation of on-chain information from January 2025 done February 2026 suggests overmuch of the maturation was not integrated usage, but a question of low-value code poisoning and wallet dusting enabled by cheaper blockspace. “Post-Fusaka: 95% of maturation successful caller wallets is explained by newly-created ‘dusting’ wallets,” Culper wrote, adding that poisoning attacks person “more than 3x’ed,” that poisoning explains “>50% of $ETH transaction growth,” and that it present constitutes “22.5% of each ETH transactions.”

Culper said it validated the improvement firsthand, claiming it acceptable up 2 caller wallets, transferred betwixt them, and was targeted by poisoning attacks “within 5 minutes,” portion asserting that poisoning losses are “already pacing >8x higher than pre-Fusaka.”

Vitalik Is Selling

The steadfast besides tried to necktie its tokenomics thesis to Buterin’s caller sales activity, portraying it arsenic informed selling alternatively than regular treasury management.

“This is why, we think, Vitalik is selling ETH manus implicit fist. On January 30, Vitalik pre-announced he’d merchantability 16,384 ETH to money the Foundation’s ‘austerity period.’ Since then, he’s sold implicit 19,300 ETH and counting,” Culper wrote. “He knows what Tom Lee doesn’t: ETH tokenomics are broken.”

Culper closed by broadening the carnivore lawsuit into a contention story, claiming ether is losing stock to Solana and to Ethereum’s ain L2s, and likening ETH’s existent presumption to incumbents that led aboriginal eras earlier being displaced.

At property time, ETH traded astatine $2,080.