Investors should be looking at cryptocurrencies in the new year with high inflation and more modest stock gains looking ahead, said Anastasia Amoroso, chief investment strategist at iCapital Network.

“The 60/40 portfolio is just not going to be enough to beat inflation and deliver returns,” Amoroso said on Bloomberg.

“The thing you might want to do is peel a little bit from the 60 and allocate to something like cryptocurrencies, because if the portfolio has a chance of beating inflation, you have to have hypergrowth in the portfolio.”

Amoroso noted the significant rise in cryptocurrencies this year, saying that Bitcoin has “classic inflation-hedging characteristics,” including its limited supply of 21 million alongside growing demand.

Following this week’s losses, Bitcoin is now up 100% so far this year while Ether 475%. Altcoins meanwhile have recorded insane gains with notable mentions including AXS (21,447%), FTM (11,414%), SAND (11,074%), SOL (10,965%), RGT (9,197%), MATIC (8,708%), and LUNA (6,356%).

The total cryptocurrency market cap has surpassed $3 trillion, up from $1.25 trillion in July this year and $135 billion in March 2020.

Amoroso likened digital coins' potential to the early days of Netflix Inc. and Facebook, saying that investors should consider crypto's network value.

“It's all about adoption. It's about the number of new wallets. The number of new addresses and we've seen that number surge this year.”

“I think there's a lot more potential ahead.”

Meanwhile, the traditional safe haven asset gold has barely seen much gains as it ranges since hitting its all-time high at $2,075 in August last year, just up 8% from its previous peak in late 2011.

As of writing, the bullion is trading at $1,852 per ounce, up 7.57% in Q2 but down 1.82% YTD.

Traders and investors are caught between concerns over broadening inflationary risks and the prospects of interest rate hikes earlier than expected. The acceleration in consumer prices has heightened concerns that inflation could stay high well into next year.

“While elevated inflation has enticed strong buying interest in gold, expectations of policy normalization by the U.S. Fed and other major central banks amid a sharp recovery in growth remains the key headwind for the metal,” said Sugandha Sachdeva, vice president of commodity & currency research at Religare Broking.

JPMorgan meanwhile said on Friday that it is expecting fiat currencies in Europe, Africa, and the Middle East to suffer due to the prospect of higher core bond yields in developed markets.

“The global inflation narrative is shifting from ‘temporary' to ‘permanent,' raising the prospect of a sharp adjustment in core yields,” JPMorgan's Saad Siddiqui said in a note to clients. “EM FX is unlikely to escape unscathed in this scenario.”

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