Culper Research Shorts ETH, Says Ethereum Price Is Going Down

Key Insights:

• Culper Research unveiled its short position on the Ethereum (ETH) price, citing concerns about tokenomics after the Fusaka upgrade.
• Ethereum supporters dispute the claims, pointing to strong staking levels, steady ETH burn, and growing L2 activity.
• Recent outflows from U.S. spot Ethereum ETFs signal caution among some institutional investors.

Ethereum price is under fresh pressure after Culper Research revealed a short position against Ether and related treasury firms.

The research firm argues that recent network changes have weakened ETH tokenomics, but supporters say the claims ignore key data about usage, staking, and supply.

Culper Research Explains Why it is Shorting Ethereum Price

Ethereum price came under criticism after Culper Research announced it is shorting Ether and several ETH-linked securities, including BitMine Immersion Technologies.

The firm said its decision is tied to concerns about Ethereum’s tokenomics after the December 2025 Fusaka upgrade.

According to Culper, the upgrade weakened the economic structure that supports the value of Ethereum.

The report claims that transaction fees on the network have collapsed, which in turn reduces the amount of Ethereum (ETH) burned.

Lower burn levels could mean more ETH supply over time, something the firm believes could weigh on the Ethereum price.

The research group also suggested that Ethereum co-founder Vitalik Buterin is aware of these pressures.

In its statement, Culper argued that Buterin has been selling ETH while some supporters continue to promote a bullish outlook.

Another point raised in the report involves network activity. Additionally, Culper said address-poisoning and dust attacks have increased on Ethereum (ETH).

Notably, the firm claimed that these spam transactions now account for a large share of activity on the network and that many new wallets are created only for spam purposes.

The report further questioned the health of Ethereum’s validator economy. Culper suggested that reduced transaction fees and shifting network activity could weaken rewards for validators over time.

Supporters of Ethereum quickly responded to the short thesis and argued that several of Culper’s points leave out important context.

Data shared by the account Ethereum Daily said the fall in gas prices was expected. The goal of the Fusaka upgrade was to reduce transaction costs on the main network.

Lower fees make it easier for developers and users to operate on the chain and also encourage activity on layer-two networks. Even with cheaper gas, ETH burning remains active.

Figures shared in the discussion show that daily ETH burn in February 2026 was still higher than the network’s annual inflation rate of about 0.8%.

Supporters say this means Ethereum continues to destroy more ETH than it creates.

Likewise, the address-poisoning claim was also disputed. When layer-two batch transactions are separated from the data, dust transactions represent a much smaller share of activity.

Genuine usage on networks such as Optimism, Arbitrum, and Base still drives most of the growth.

Supporters added that new wallet creation remains strong. Non-spam wallets grew about 12% year over year in the first quarter of 2026.

Active addresses have also risen sharply as more users interact with Ethereum-based applications.

Validator economics were another point of defense. Block rewards remain about two ETH per block, and total annual returns for validators, including MEV, are estimated at around four to five percent.

Staking participation also remains high. About 19 million ETH is currently staked, which represents roughly two-thirds of the supply that secures the network.

Ethereum Price Sentiment Shifts as ETF Outflows Appear

SoSoValue data shows recent outflows from the US spot Ethereum ETF. Data indicates a daily net outflow of about $90.94 million as of March 5.

At the same time, cumulative net inflows remain around $11.71 billion. The chart also shows total Ethereum ETF net assets close to $11.99 billion, while ETH itself trades near $2,090.

Short-term outflows do not always signal a long-term trend, but traders often watch ETF flows closely because they reflect institutional demand.

When funds see outflows, it can indicate caution among large investors. This context is important for the current discussion around the Ethereum (ETH) price. Critics argue that the flows support the case for weaker demand, while supporters say temporary outflows are normal in volatile markets.

For now, the clash between Culper Research and Ethereum advocates has added a fresh layer of debate.

Investors will continue to watch network activity, staking levels, and ETF flows to see which narrative proves stronger for the Ethereum price in the months ahead.