The 'Crypto Cutoff' Is Coming

In today's Masters Series, originally from the July 6 Crypto Cashflow issue, Eric details the ins and outs of the upcoming Ethereum upgrade... explains how it could create a slew of buying opportunities... and shares how we can position ourselves to take advantage... [Stansberry Research Logo] Delivering World-Class Financial Research Since 1999 [Stansberry Master Series] Editor's note: [It's time to prepare for a shift in the crypto market](... Investors have been exiting the cryptocurrency market in droves recently – much like what we saw when it entered a bear market in 2018. But Crypto Capital editor Eric Wade believes the crypto market's struggles are all about to change... You see, Ethereum – the world's second-largest crypto – is set to undergo a huge upgrade that could push many crypto prices higher. That's why Eric says it's crucial to position ourselves now so we can profit when prices soar... In today's Masters Series, originally from the July 6 Crypto Cashflow issue, Eric details the ins and outs of the upcoming Ethereum upgrade... explains how it could create a slew of buying opportunities... and shares how we can position ourselves to take advantage... --------------------------------------------------------------- The 'Crypto Cutoff' Is Coming By Eric Wade, editor, Crypto Cashflow A drawbridge is going up in the financial markets. As early as August 31, it could cut off new crypto investors from the best that decentralized finance has to offer. You see, when this cutoff happens, we expect many crypto prices to soar... And folks who wait too long to invest in the best crypto projects will pay higher prices. In short, they'll miss out on some of the best gains in the space. We're talking about the long-planned Ethereum (ETH) upgrade. When this upgrade is released, Ethereum will undergo an unprecedented change... moving from a Proof-of-Work ("PoW") consensus mechanism to a Proof-of-Stake ("PoS") mechanism. It will become faster and cheaper to use... while maintaining the network's security and decentralization. It will also drastically improve how Ethereum handles inflation. Every time a new block is created, the available supply of ETH will drop. This will turn Ethereum from inflationary to deflationary. That means every ETH will soon control a proportionally larger and larger share of the network. And it will push up Ethereum prices and many cryptos built on the network. Let me explain... Most people are surprised when they learn that the first U.S. currency wasn't the dollar. But the current Mint Act system didn't create the dollar until 1792. There were actually numerous currencies issued by the original 13 colonies. And in 1775, the first U.S. Continental Congress issued the Continental currency. If you're not familiar, it looked like this: Part of me wishes we still had "Mind Your Business" printed on our currency. Sadly, Continentals were short-lived. By the 1790s, they had lost so much value that they were redeemable for just 1% of their face value for the newly formed U.S. federal government's Treasury bonds. Inflation caused by runaway printing of legitimate bills – plus massive counterfeiting and poorly coordinated state monetary policies – eroded virtually all the Continentals' value. Anyone who held the currency risked financial ruin because of rapid inflation. It would be easy to look at this and say, "Inflation also wiped out America's first national currency... so it's bad." But economics has a funny way of never giving us a straight answer. After all, runaway inflation was how the colonies financed the Revolutionary War. So we need to consider both sides of the coin when it comes to inflation. --------------------------------------------------------------- Recommended Link: [***CRYPTO WARNING***]( Our in-house expert is issuing his first-ever crypto warning: "We're days away from a line-in-the-sand moment for cryptocurrencies." If you own any bitcoin, Ethereum, or crypto-correlated assets, here's what you need to do before August 31. [See his warning here](. --------------------------------------------------------------- In the case of the dollar... a little inflation helps fund growth, but too much inflation erodes wealth and purchasing power. That's what we're seeing today. As you can see in the chart below, since the 1960s, U.S. dollar inflation has averaged 3.8%. Today, inflation is 9.1%. We obviously don't need to tell anyone how bad inflation has gotten. You see the proof everywhere you go – the gas station... the grocery store... you can't escape it. Now, if you think the solution for inflation is deflation, it's not that straightforward. Sure, deflation means lower prices, but it often goes together with economic contraction. It can even collapse overly indebted economies. While blockchains only have some of the characteristics of a currency, they still have their own issue of inflation to deal with. For example, bitcoin (BTC) is programmed to have a reasonable 1.8% current annual inflation. That means every year, the number of new bitcoin entering the ecosystem is limited to just 328,500. But it wasn't always that way and it won't always be that way. When bitcoin launched, 2,628,000 new bitcoin entered the ecosystem each year. The number decreases around every four years and will drop again in 2024 to a mere 164,250 new bitcoin per year. That works out to less than 1% inflation. In the way that the high inflation of the U.S.'s early currency allowed a country to grow, bitcoin's early high inflation encouraged early users to spend. It allowed new users to enter the ecosystem and accelerated the network's growth. Now that inflation is lower, many people, companies, and even governments are holding their bitcoin longer and longer. Other blockchains have gone through a similar growth cycle... higher inflation at the beginning and then reducing inflation as a token or coin matures. But blockchains also must decide who the recipients of newly printed inflationary coins will be. With bitcoin's PoW model, new coins are paid out to miners who run powerful computers to validate transactions and secure the bitcoin blockchain as rewards. The computers run complicated algorithms to ensure that no coin has been improperly sent, ultimately helping to secure the network and make it less vulnerable to attacks. Other coins follow different models. For example, PoS blockchains pay out rewards to holders who validate transactions and secure the chain by "staking" some of their own coins. Stakers essentially post their tokens as collateral to the network as a promise to act honestly and only put forward legitimate transactions. As an incentive for validating legitimate transactions and keeping the network secure and honest, stakers are rewarded with newly minted tokens. By doing this, stakers aren't just helping the ecosystem, they're also participating in the token's inflationary upside. Ethereum started out life as a PoW paying rewards to miners. But it will soon upgrade to PoS, paying rewards to stakers. With this unprecedented shift, Ethereum will drop its issuance of new tokens by roughly 90%, from 5.5 million ETH to just 600,000 new ETH minted each year. On top of that, the Ethereum Improvement Proposal 1559 implemented last year began a burn mechanism where some ETH is burnt and destroyed forever with each block. With the 90% drop in issuance and burn mechanism, ETH will transition from being inflationary to deflationary. The outstanding supply of ETH will slowly decrease from the second the merge is completed until the network stops running. You can think of this deflationary model like a stock buyback. When companies have extra cash, they often buy their shares off the open market and retire them so that each outstanding share holds a proportionally larger share of the company. The same will happen with ETH. Every ETH will soon control a proportionally larger and larger share of the network. If someone stakes ETH, it will be like owning an ever-growing share of an ever-shrinking pie. That's why we believe ETH and several smaller tokens built on Ethereum will skyrocket in price. So now is the time to get in. Good investing, Eric Wade --------------------------------------------------------------- Editor's note: This isn't just speculation or hype. This cutoff could take place as soon as August 31... which means you need to start preparing now. Eric closed out 27 winning positions in 2021 alone, and nine of them earned 10-bagger returns. Now, with this Ethereum upgrade poised to boost crypto prices, he's ready to rake in more profits. That's why he recently used his proprietary system to find the cryptos with the highest income potential for when the cutoff hits. [Get the full details here](. --------------------------------------------------------------- Recommended Link: [Oil's New Inflection Point (Prepare NOW)]( It's a new turning point for oil that could drastically alter our economy this year. Goldman Sachs says it's the crux of its next 2022 play... And numerous top hedge funds have just changed their oil positions. [Click here for the full oil story](. --------------------------------------------------------------- You have received this e-mail as part of your subscription to Stansberry Digest. If you no longer want to receive e-mails from Stansberry Digest [click here](. Published by Stansberry Research. You’re receiving this e-mail at {EMAIL}. Stansberry Research welcomes comments or suggestions at feedback@stansberryresearch.com. This address is for feedback only. For questions about your account or to speak with customer service, call 888-261-2693 (U.S.) or 443-839-0986 (international) Monday-Friday, 9 a.m.-5 p.m. Eastern time. Or e-mail info@stansberrycustomerservice.com. Please note: The law prohibits us from giving personalized investment advice. © 2022 Stansberry Research. All rights reserved. Any reproduction, copying, or redistribution, in whole or in part, is prohibited without written permission from Stansberry Research, 1125 N Charles St, Baltimore, MD 21201 or [www.stansberryresearch.com](. Any brokers mentioned constitute a partial list of available brokers and is for your information only. Stansberry Research does not recommend or endorse any brokers, dealers, or investment advisors. Stansberry Research forbids its writers from having a financial interest in any security they recommend to our subscribers. All employees of Stansberry Research (and affiliated companies) must wait 24 hours after an investment recommendation is published online – or 72 hours after a direct mail publication is sent – before acting on that recommendation. This work is based on SEC filings, current events, interviews, corporate press releases, and what we've learned as financial journalists. It may contain errors, and you shouldn't make any investment decision based solely on what you read here. It's your money and your responsibility.