Culper Research has opened a short on Ethereum (ETH), arguing recent upgrades that lower network fees could reduce validator fee revenue and trigger a long‑term 'death spiral'; firms like Bitmine Emersion Technology are cited as heavily exposed. The report alleges on‑chain activity may be inflated by spam transactions (address poisoning, dusting), calling into question adoption and DeFi/DEX usage metrics and raising security concerns. It also claims a wallet linked to Vitalik sold large amounts of ETH this year, highlighting token performance risks that contradict bullish narratives.

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Culper Research is shorting Ether, citing falling network fees.
The firm says some Ethereum activity may be inflated by spam transactions.

Culper Research has recently said that it has opened a short position against Ether and warns that recent changes to the blockchain could weaken its long-term economic model. They say that a falling network event could hurt incentives that keep the system secure. In a recent report, Culper Research disclosed that it is betting against Ethereum’s price and the companies are heavily exposed to cryptocurrencies. One company is Bitmine Emersion Technology, which has accumulated a large amount of ETH.

Fee decline raises concerns

The major argument in Culper’s report is that Ethereum’s recent network upgrades may weaken the system’s economic incentives. Ethereum upgrades were designed to increase transaction capacity and lower transaction costs for users. The report argues that the rewards for the validators may become less attractive if fee revenue declines too much. Culper describes this situation as the “Death Spiral.”

The report also questions whether tabulating some Ethereum activity data reflects real growth. The firm suggests that spam-like activities, such as address poisoning and dusting attacks, could be the cause of some transactions. According to the report, these types of transactions can artificially increase network activity metrics.

The report claims that the wallet associated with Buterin has sold large amounts of ETH this year, and the firm argues that such activity contradicts some bullish narratives around ETH’s long-term outlook. The report comes when the ETH ecosystem is undergoing major structural changes.

Supporters say changes will make Ethereum more efficient and scalable, but people who critics say it could change the economic incentives. Cuplers Research’s short-term positions, on the other hand, show that there is a growing debate about how ETH’s economic model is changing. The future of Ethereum’s upgrades is still a hot topic of conversation in the crypto firm, with different points of view.