Short-selling firm Culper Research has taken a bearish bet on Ethereum (ETH)-linked assets, saying Ethereum's economics worsened after a recent network upgrade.

On March 5, blockchain outlet CoinDesk reported that Culper Research said in a recent report that transaction fees fell sharply after the Fusaka upgrade in December 2025, as an excessive supply of block space flooded the network. Validators earn some income from transaction fees, and lower fees have reduced staking yields, the report said.

The report said that this structure could create a "negative feedback loop" that starts with lower validator income and weaker demand for staking, and leads to weaker network security.

The report also cited blockchain analysis data and pointed to Ethereum co-founder Vitalik Buterin (비탈릭 부테린) selling about 20,000 ETH this year, worth about $40 million at current prices. Culper Research said, "Buterin is selling, but some bulls are failing to see Ethereum's new reality," adding, "We stand on the same side as Buterin."

The report also rebutted claims by Tom Lee (톰 리), BitMine chairman and a long-time Ethereum bull. Lee cited higher transaction counts and more active addresses as evidence of improving network fundamentals, but Culper Research said those metrics may have been inflated by a rise in fraudulent transactions such as "address poisoning" attacks rather than by real growth.

Culper Research estimated that Ethereum network fees have fallen by about 90 percent since the upgrade. The report said, "If utility does not increase, Ethereum could eventually fall into a 'death spiral'," raising the possibility of damage to the network's value.

The report also targeted BitMine Immersion Technologies, which is pursuing an Ethereum-focused treasury strategy. The company has accumulated about 4.4 million ETH since last July, but is estimated to have logged about $7.4 billion in unrealised losses due to the recent price drop.