I think it is a little crazy to cut Fitch. He is a top 10 WW.
But it isn't that crazy. Sports teams cut quality players, many times older players for money reasons all the time. Charles Woodson is still a good football player and one of the most respected players in the league, yet the Packers released him to save cap space.
Fitch can make decent money in Bellator and become champ. It isn't the end of the world for him. That said Dana wants that to happen. Fitch goes over and Fitch's all their guys with ease, it makes their division dull (Askren already does this) but FItch will smother guys in Bellator while being one of their "big names". Isn't exactly great to pay a guy like Fitch to beat all your talent. The return on him isn't much. People won't flock to watch him even though he would right now be one of their top 3 best fighters.
Dana has been looking for a reason to get rid of Fitch. They finally started giving him tough matchups rather than guys like Gono. I was surprised then I heard this. But if you think about it, it isn't that surprising at all. If Dana doesn't like you much, you better put asses in seats or keep winning.