Ethereum breaks through $2000 but is still being shorted? Culper Research questions the impact of Fusaka upgrade on ETH's economic model

March 6 News: New York-based short-selling firm Culper Research disclosed that it is shorting Ethereum (ETH) and related stocks, including BitMine (BMNR), despite ETH recently surpassing $2,000. In its latest report, Culper stated that the Ethereum Fusaka upgrade could weaken its token economic model, claiming that Vitalik Buterin’s judgment on blockchain expansion and transaction fee changes is better than market bulls, including Tom Lee.

The report shows that the Fusaka upgrade will raise the Layer 1 gas limit from 45 million units to 60 million units, theoretically reducing transaction fees by 10-30% and increasing activity. However, Culper noted that actual transaction fees have plummeted by about 90%, leading to low-value transactions filling blocks, reduced validator rewards, decreased staking demand, and thus impacting network security. Culper also pointed out that BitMine, as a major Ethereum holder, may face risks with its $4.47 million worth of ETH.

Additionally, Vitalik’s recent sale of ETH was interpreted by Culper as a potential bearish signal. The report states that after the Fusaka event, 95% of new wallets are linked to “cash-out” wallets, with phishing attacks tripling, explaining over 50% growth in ETH transactions. Culper believes these signs indicate potential issues with Ethereum’s token economic model.

However, Ethereum Daily countered this view. The platform pointed out that declining fees will promote Layer 2 adoption, with daily burn amounts reaching $1.2 billion, still supporting the token economy; active addresses increased by 117%, mainly driven by real users; validator ecosystem remains stable, with staked ETH accounting for 66%, and block rewards and annual yields remaining healthy. BitMine’s balance sheet is solid, earning $350 million annually from staking fees and holding over $3 billion in cash equivalents.

Overall, while ETH briefly broke above $2,000, debates around the Fusaka upgrade and on-chain economic models continue. Market opinions on Ethereum’s long-term value and stability are divided, and investors should keep an eye on on-chain developments and validator ecosystem growth.