 ▲ Ethereum (ETH), Cryptocurrency Decline / AI-Generated Image |
Tensions are rising in the digital asset market as large-scale short positions have been established based on deteriorating profitability following Ethereum’s (ETH) network upgrade.
According to crypto-focused outlet NewsBTC on March 6 (local time), short-selling firm Culper Research disclosed short positions related to Ethereum and associated stocks, claiming that the network’s economic structure has been seriously undermined. Culper Research analyzed that the Fusaka upgrade conducted in December 2025 excessively increased block space on the network, resulting in an approximately 90% drop in transaction fees. The firm warned that reduced rewards for validators, who rely on fee revenue, could decrease staking demand and ultimately trigger a death spiral that weakens network security.
The report also drew attention to recent actions by Ethereum co-founder Vitalik Buterin. Buterin is said to have sold around 20,000 ETH worth approximately $40 million this year, which Culper Research interpreted as a lack of confidence in the network’s future. “Buterin recognized reality and began selling, but bulls have yet to grasp the new reality,” the firm stated. Meanwhile, BitMine Chairman Tom Lee, known as an Ethereum bull, maintains an optimistic outlook based on increases in active addresses and transaction volume. However, Culper Research dismissed these indicators as mere illusions caused by spam transactions such as address poisoning.
BitMine currently holds about 4.4 million ETH but is estimated to be facing unrealized losses of approximately $7.4 billion due to Ethereum’s price decline. Culper Research assessed that Ethereum is losing market share to competing networks such as Solana as well as its own Layer 2 solutions, emphasizing that unless the asset’s real utility increases, it would be akin to entering a death spiral. Ethereum is currently trading below the $2,000 level, threatening a key psychological support line.
The Ethereum Foundation explained that Buterin’s sales were planned measures to secure funding for ecosystem development and emphasized the network’s stability. As controversy grows over the tokenomics flaws raised by short sellers, investor skepticism is increasing regarding the upgrade’s actual effectiveness. Market participants are closely watching changes in staking yields and qualitative improvements in network activity as they consider their response strategies.
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