{"id":95005,"date":"2026-03-06T15:50:21","date_gmt":"2026-03-06T12:50:21","guid":{"rendered":"https:\/\/forklog.com\/en\/?p=95005"},"modified":"2026-03-06T15:56:48","modified_gmt":"2026-03-06T12:56:48","slug":"culper-research-predicts-a-death-spiral-for-ethereum-and-goes-short","status":"publish","type":"post","link":"https:\/\/forklog.com\/en\/culper-research-predicts-a-death-spiral-for-ethereum-and-goes-short\/","title":{"rendered":"Culper Research predicts a \u2018death spiral\u2019 for Ethereum and goes short"},"content":{"rendered":"

Research firm Culper Research has taken short positions in Ethereum and BitMine\u2019s shares. The analysts argue<\/a> that the altcoin\u2019s economics have worsened after a recent network upgrade.<\/p>\n

According to the report, the December 2025 Fusaka<\/a> upgrade created excess block space, pushing transaction fees down by roughly 90%. Validators\u2019 revenues depend directly on these fees, so staking<\/a> profitability has slumped.<\/p>\n

This, they say, triggers a negative loop: lower yields curb demand to lock up coins and jeopardise the blockchain\u2019s security.<\/p>\n

Culper Research also cited Lookonchain data<\/a>. This year Ethereum co-founder Vitalik Buterin sold about 20,000 ETH\u2014nearly $40m at current prices.<\/p>\n

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\u00abVitalik is selling while \u2018bulls\u2019 like [BitMine chairman] Tom Lee fail to grasp the asset\u2019s new reality. We are on Vitalik\u2019s side,\u00bb the report says.<\/em><\/p>\n<\/blockquote>\n

The short-sellers disputed Lee\u2019s claims, who had cited rising transactions and active addresses as proof of the network\u2019s stability.<\/p>\n

Culper deems those metrics distorted: a significant share of network activity, it says, stems from address \u201cpoisoning\u201d, in which bad actors blast spam transactions.<\/p>\n

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\u00abBy Lee\u2019s logic, if the asset\u2019s utility is not growing, then ether has entered a \u2018death spiral\u2019. We are confident that is exactly what is happening now,\u00bb the researchers said.<\/em><\/p>\n<\/blockquote>\n

The second leg of the short targets BitMine\u2014one of the largest corporate buyers of the second-biggest cryptocurrency.\u00a0<\/p>\n

Since July the company has bought roughly 4.4m ETH. According to DropsTab, the price slump has cut the value of those reserves by 45%. BitMine\u2019s unrealised loss has already reached $7.5bn.<\/p>\n

\"\u0421\u043d\u0438\u043c\u043e\u043a
Source: DropsTab<\/a>.<\/figcaption><\/figure>\n

What is happening to ether?<\/h2>\n

The price of the second-largest cryptocurrency fell 6.5% (to $2,057) after a brief spike to $2,200<\/a>. The pullback followed declines in the US stock market amid global geopolitical tension and disruptions to energy supplies.<\/p>\n

\"ETHUSDT_2026-03-06_14-45-35\"
Hourly chart of ETH\/USDT on Binance. Source: TradingView<\/a>.<\/figcaption><\/figure>\n

Investors have marked down growth expectations and shifted to risk-off. Added uncertainty came from a US court ruling that ordered the government to pay businesses $130bn<\/a> in tariff refunds.<\/p>\n

Apathy in the derivatives market<\/h2>\n

On-chain data and derivatives point to weak buyer interest. The annualised premium on 30\u2011day ether futures remains below the neutral 5% threshold, signalling little demand for leveraged longs.<\/p>\n

\"019cbfa6-ab33-7905-ad50-50682d96bf54\"
Source: Laevitas.ch<\/a>.<\/figcaption><\/figure>\n

Ether\u2019s options skew (put\/call) has reached 7%. Readings above 6% traditionally imply that large players and market makers<\/a> are buying protection against further downside. The caution of seasoned traders gives bears room to increase pressure on the price.<\/p>\n

\"019cbfa6-6ba2-738a-8c07-1926018b7223\"
Source: Laevitas.ch<\/a>.<\/figcaption><\/figure>\n

What the next altseason could look like<\/h2>\n

In the next altcoin season, assets from projects with real-world use and active audiences will win out, said Bitwise chief investment officer Matt Hougan. The euphoria of past cycles, when virtually every cryptocurrency rose, will not return, he said.\u00a0<\/p>\n

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