Ethereum Tokenomics Concerns Rise as Short Sellers Target Ether and BitMine

A new report from short selling firm Culper Research claims that the December 2025 Fusaka upgrade on the Ethereum network has weakened the economic model supporting the second-largest cryptocurrency. According to the report, the upgrade significantly increased available block space, which sharply reduced transaction fees across the network.

Lower fees may benefit users, but they also affect validator earnings. Validators receive a portion of network fees as part of their staking rewards. With fees falling sharply, the report argues that staking yields have declined, potentially reducing incentives for participants who help secure the network.

Short Sellers Warn of Potential “Death Spiral”

The report suggests that reduced staking returns could trigger a negative cycle in which fewer participants stake ETH, weakening network security and confidence in the ecosystem.

The criticism also references Ethereum co-founder Vitalik Buterin, who reportedly sold close to 20,000 ETH this year, worth around $40 million.

Meanwhile, Ethereum-focused treasury firm BitMine has accumulated about 4.4 million ETH. With recent price declines, those holdings are estimated to be roughly 45% below acquisition levels, representing about $7.4 billion in unrealized losses, according to blockchain data analytics.

Disclaimer

This content is for informational purposes only and does not constitute financial, investment, or legal advice. Cryptocurrency trading involves risk and may result in financial loss.