Ethereum hits two-month low as Culper's short call starts to bite

Ethereum is bleeding. The second-biggest crypto touched its lowest level since August 19, and it has now given up more than 31.5% from its August high, with chart watchers pointing to more room below. The drop lands as Culper Research, the New York firm that warned about the Jensen Huang affair in May, watches its March short call on Ethereum play out.

According to Invezz, Huang confirmed this week that he had an affair with a Chinese national whom US intelligence officials believe to be a spy, and he resigned on Thursday. Culper had flagged the affair with Alice Huang months earlier. Traders are now digging through the firm's other warnings — including its March report calling Ethereum a 'death spiral' after last year's Fusaka upgrade, and its short position in BitMine, the largest Ethereum holder.

The fundamentals back the bear case. DeFi Llama data shows Ethereum pulled in just $27.3 million in fees this quarter, down from $34 million in the prior quarter, and $153 million for the year so far, against $523 million last year. Less fee revenue means less ETH burned under EIP-1559, kneecapping the deflation story. Culper also found that 22% of all Ethereum transactions were tied to address poisoning, meaning much of the wallet growth is spam — and flagged that Vitalik Buterin keeps selling his ETH.

ETF money is leaving too. Spot Ethereum ETFs have shed more than $766 million this month after losing $1.6 billion last month, for a total of over $2.6 billion across the stretch. Futures open interest dropped 6.5% in 24 hours and now sits at $23.5 billion, well off the more than $60 billion peak hit earlier this year. Liquidations have climbed as exchanges close out leveraged positions.

The chart isn't helping. ETH is setting up a death cross as the 50-day and 200-day moving averages close in on each other, and the coin has already broken below the 61.8% Fibonacci retracement level. Culper's next downside target sits at $1,500. A push above the 50% retracement at $2,157 would blow up the bearish thesis.