Culper Research Shorts ETH, Says Ethereum Price Is Going Down

Ethereum's price is facing renewed pressure following the revelation of a short position by Culper Research, which cites concerns over the network's tokenomics post-Fusaka upgrade. The research firm argues that recent network changes have weakened ETH's economic structure, leading to a collapse in transaction fees and a reduced ETH burn rate. This, they contend, could lead to increased supply and negatively impact the Ethereum price. Culper Research also pointed to an increase in address-poisoning and dust attacks, suggesting these spam transactions constitute a significant portion of network activity and that many new wallets are created solely for spam purposes. The firm further questioned the health of the validator economy, suggesting that reduced fees and shifting network activity might diminish validator rewards over time.

Ethereum Supporters Rebut Short Thesis

Ethereum proponents have strongly contested Culper Research's claims, highlighting that the decrease in gas prices was an anticipated outcome of the Fusaka upgrade, designed to lower transaction costs and encourage activity on layer-two networks. Data indicates that despite lower fees, ETH burning remains robust, with daily ETH burn in February 2026 exceeding the network's annual inflation rate of approximately 0.8%, meaning more ETH is being destroyed than created. The address-poisoning concerns were also disputed, with proponents stating that dust transactions represent a smaller share of activity when layer-two batch transactions are separated. They emphasized that genuine usage on networks like Optimism, Arbitrum, and Base continues to drive growth, with non-spam wallet creation increasing by about 12% year-over-year in Q1 2026 and active addresses rising significantly. Validator economics remain strong, with block rewards at about two ETH per block and estimated annual returns around 4-5%, including MEV. Staking participation is also high, with approximately 19 million ETH currently staked, securing about two-thirds of the network's supply.

ETF Outflows Signal Shifting Sentiment

Adding to the debate, recent data from SoSoValue shows outflows from U.S. spot Ethereum ETFs, with a daily net outflow of approximately $90.94 million as of March 5. While cumulative net inflows remain substantial at around $11.71 billion and total ETF net assets are close to $11.99 billion, these short-term outflows are being watched closely as an indicator of institutional investor sentiment. Critics argue these flows suggest weakening demand, while supporters maintain that such outflows are normal in volatile markets. The ongoing discussion between Culper Research and Ethereum advocates, coupled with these ETF flows, has introduced a new layer of complexity for investors monitoring network activity, staking levels, and ETF performance to gauge the future trajectory of the Ethereum price.