I just reviewed a very interesting analysis from Culper Research that is betting against Ethereum, and honestly, some of their arguments about negative feedback in the network deserve attention.

The thesis is quite clear: after recent upgrades, the network became congested with block space, causing transaction fees to drop significantly. When fees fall, staking yields also decline, and this is where the negative feedback cycle they mention comes into play. Less income for validators could compromise the network's economic security, which is no trivial matter.

What caught my attention the most was the data about Vitalik Buterin selling nearly 20,000 ETH last year for about $40 million. It’s not that an isolated sale is conclusive, but when someone of that magnitude in the project is reducing positions, it definitely says something about internal confidence.

Culper also questions the optimistic numbers circulating about network activity. According to their analysis, part of the transaction increase comes from address poisoning attacks, not real adoption. That’s an important detail many overlook.

Additionally, they highlight that BitMine, one of the main ETH holders, is showing significant unrealized losses, with their holdings estimated at 45% below value. When large accumulators are underwater like that, the negative feedback is amplified even more.

Looking at current numbers, ETH is at $2,350 with an annual return of 33.67%, so clearly the market has not fully internalized these concerns. But Culper’s analysis raises legitimate questions about whether Ethereum’s economic model is sustainable in this context. It’s worth keeping this on the radar.