Hedge fund Culper Research announced on Thursday that it has opened a short position against ether and ETH-linked securities — including BMNR — arguing that recent changes to Ethereum’s on-chain economics will keep downward pressure on the token.
Culper’s thesis centers on the December 2025 “Fusaka” upgrade. In a post on X, the firm said Fusaka’s L1 scaling tweaks dramatically compressed fees and damaged validator revenue, arguing that those effects undermine staking incentives and broader institutional demand for ETH. “We are short Ether ETH, and ETH-linked securities, incl. BMNR,” the firm wrote. “We think ETH tokenomics are impaired following the December 2025 Fusaka upgrade. Vitalik knows it and is selling, while ETH’s most ardent bull, Tom Lee, is throwing good money after bad.”
What Culper says changed
Culper points to a planned gas-limit increase — from roughly 45M to 60M — intended to scale base-layer capacity. The firm says Ethereum leadership (including Vitalik Buterin and the protocol team governance, “PTG”) expected fees to fall 10–30%. Instead, Culper claims gas fees plunged roughly 90%, and that the network’s leadership and validators “miscalculated L1 demand elasticity by 3–9x based on outdated math (pre-EIP-1559 and pre-L2s).”
Why that matters: validator and staking economics
The firm argues the fee collapse ripples through validator economics. Culper estimates validators are now receiving 40–50% lower “tips per gas,” which it says reduces validator yields and diminishes demand for staking and for “high-value activity” on-chain. In Culper’s view, that reverses the narrative of a reinforcing adoption “flywheel” and instead creates a self-reinforcing headwind for ETH.
Clash with bulls: activity vs. utility
Culper framed its note as a rebuttal to bullish takes such as those from Tom Lee, who has pointed to post-Fusaka spikes in active addresses and transaction counts as signs of rising utility and institutional adoption. Culper counters that the activity spike is not genuine organic usage but low-value “address poisoning” and wallet dusting enabled by cheaper blockspace. Using on-chain analysis from January 2025 through February 2026, the firm claims:
- 95% of new-wallet growth is explained by newly created “dusting” wallets;
- poisoning attacks have more than tripled;
- poisoning accounts for over 50% of ETH transaction growth and now represents 22.5% of all ETH transactions.
Culper said it validated the pattern directly by creating two wallets, moving funds between them, and being targeted by poisoning attempts within five minutes. It also claims poisoning-related losses are already pacing more than 8x higher than pre-Fusaka levels.
Vitalik’s sales: signal or routine?
Culper links its tokenomics concerns to recent ETH sales by Vitalik Buterin. The firm notes that on January 30 Vitalik announced he would sell 16,384 ETH to fund an austerity period for the Foundation, and that total sales have since exceeded 19,300 ETH. Culper interprets those moves as informed selling tied to deteriorating tokenomics rather than merely routine treasury management.
Broader competitive angle
Rounding out its bear case, Culper argues ETH is losing share to alternative chains like Solana and to its own layer-2 ecosystems — a dynamic the firm likens to past incumbents that ceded ground after early dominance.
Market snapshot
At the time of Culper’s disclosure, ETH was trading around $2,080.
Bottom line
Culper’s short is a high-profile, data-driven attack on ETH’s post-Fusaka economics that stitches together fee dynamics, validator rewards, on-chain activity composition, and founder sell-offs. Its claims are specific and quantitative, but they reflect one firm’s interpretation of the post-upgrade landscape; the debate over whether Fusaka’s changes signal lasting structural weakness or temporary growing pains is likely to continue.
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