Ethereum's sell-off intensified on Thursday, with ETH falling to its lowest level since August 19 and trading more than 31.5% below its August peak. The decline has drawn fresh attention to a March short thesis from Culper Research, the New York firm that previously warned about the Jensen Huang affair before it became public.
In its March report, Culper Research said it was short Ethereum and described the network as being in a “death spiral” following last year’s Fusaka upgrade. The firm argued that base fees would keep falling, reducing the amount of ETH burned under EIP-1559 and weakening Ethereum’s deflationary narrative. Recent data from DeFi Llama appears to support that view: Ethereum generated just $27.3 million in fees this quarter, down from $34 million in the previous quarter and well below last year’s $523 million annual total, with only $153 million generated so far this year.
Culper also flagged that wallet growth has been inflated by spam, with about 22% of Ethereum transactions tied to address poisoning, and noted that co-founder Vitalik Buterin has continued selling ETH. Meanwhile, spot Ethereum ETF outflows have accelerated, with $766 million in outflows this month after $1.6 billion last month, bringing the total to more than $2.6 billion. Futures open interest has also dropped 6.5% in 24 hours to $23.5 billion, down from a peak above $60 billion, signaling reduced speculative demand.
From a technical perspective, Ethereum is approaching a death cross as the 50-day and 200-day moving averages narrow, and the price has broken below the 61.8% Fibonacci retracement level. Analysts see the next downside target near $1,500, while a move back above the 50% retracement level at $2,157 would invalidate the bearish setup.
