Citrini Research leaves Bitcoin out of crypto investment strategy, focusing on blockchain infrastructure

Bitcoin is sitting out Citrini Research’s latest crypto investment play, and the reason is more interesting than another argument about whether the world’s largest cryptocurrency is overpriced.

What Citrini is banking on is the idea that AI can revolutionize the flow of money and thus needs exposure to companies that process these transactions.

It sounds like a joke until one remembers the capabilities of AI. Picture a situation where a person instructs an electronic assistant to find him a more economical mortgage, transfer his savings to a more lucrative bank account, and invest his money as he goes about his business.

Citrini believes that this future is coming closer, and the banks are going to hate it. They will no longer have customers depositing their money with them, because machines would be programmed to seek out greater returns.

Citrini thinks AI could finally give crypto a real purpose

“Our financial system was not designed for this future. It’s slow, fragmented and gate-kept by layers of intermediaries, legal authorities and KYC processes. It was built by humans, for humans.”

Citrini’s concern is that financial institutions could struggle when millions of automated assistants start moving customer money continuously, potentially draining deposits from banks offering uncompetitive rates.

Two things may happen in this situation. One is that the current banks will innovate to allow for more fluid movement of software money. Or, there will emerge new finance networks for this task.

Blockchain technology has had around 15 years of being able to make payments without having a closing time. The issue was making sure there were enough good reasons for people to use them.

Let’s not pretend the industry’s history has been particularly convincing. Between FTX, questionable tokens, complicated wallets and endless transaction fees, crypto has given skeptics plenty of ammunition. Most investors weren’t exactly desperate to learn how blockchain bridges worked just to buy another dog-themed coin.

“Both of those things are now changing. Financial assets are being tokenized and brought onchain. The worlds of traditional finance and crypto are merging.” The arrival of AI agents adds another dimension because machines can operate financial applications without struggling through the confusing interfaces that frustrate human customers.

Now, consider the internet when it was first developed. One did not need to know how to operate TCP, IP, or HTTPS when viewing web pages; the browsers dealt with all that on their own.

This is what Citrini hopes future blockchain technology will be like, but according to it:

“We felt the urge that strikes any thematic investor on the cusp of a big idea: to investigate. So I downloaded Coinbase Wallet, loaded up $1,000 and went where very few investors return from with a positive ROI: the onchain trenches. Expecting to get rug-pulled, we were surprised by my findings.”

According to Citrini, it realized that while investors (and Citrini Research itself) were engaged in an ongoing debate about GPUs and memory constraints, a system of financial applications was quietly emerging, which is, in many aspects, comparable to TradFi.

A completely different world, one that goes way beyond standard get-rich-quick scams, ranging from tokenized treasuries, equities, and options to programmable loans, payments, yield farms, and even entire applications that simply did not exist a few years back.

Hyperliquid, Robinhood and regulators transform the situation

The turning point referred to by Citrini came in March during the Iran crisis, when the traders required somewhere to respond to the developments on the oil market during the weekend.

Hyperliquid offered the ability to trade the futures contracts based on the oil when the regular exchanges were not operating.

On the other hand, Robinhood (HOOD) launched its Stock Tokens product, contributing to the maturation of tokenized stocks away from stand-alone trading platforms. What makes this interesting is that these assets can now be transferred between applications. Citrini said:

“To grasp the scale… In September, Solana temporarily processed more trades than the NYSE…and while most of this activity is surely bots, meme pairs and other nonsense, that still says quite a lot about the traction this is getting.”

While the number of transactions in itself does not determine economic value, it does show the extent of busyness of decentralized networks.

Also, Washington cannot be ignored anymore. Following the failure of CLARITY Act in the Senate, the SEC introduced a five-year exemption from regulation of some stock-token trading operations.

On the other hand, Coinbase (COIN) had a proposed US equity perpetual futures offering that was being reviewed by the CFTC.

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