25th October 2022 > > Israel.

tl;dr

Good news from Israel, and a sobering lesson regarding AI trading bots.

Market Snap

Market Wrap

Stocks have had a decent rally in the last fortnight, up nearly 10%. Cryptos have not followed, but a reduction in correlation between stocks and cryptos is healthy.

Curious Cryptos’ Commentary – Israel

The Tel-Aviv Stock Exchange (TASE) has announced it is moving into the crypto world.

TASE has just published its strategic plan for 2023-2027 has four key goals of which one is:

“Creating a platform for digital assets using blockchain (DLT) and venturing into crypto.”

The announcement explains in more detail what that objective looks like in practice:

“TASE will promote the implementation of innovative technologies, including DLT, tokenizing of various classes of digital assets and smart contracts. TASE intends to examine multiple potential action plans, including conversion of existing infrastructure to innovative technologies, deployment of innovative technologies into specialized platforms, offering a basket of services and products for digital assets and more.”

Ittai Ben-Zeev, CEO of TASE gave his personal spin on this development:

“The next five years are a critical window of opportunity for TASE to play an active role in the technological revolution of the global capital markets.”

The CCC always approves of the use of the word revolution when talking about cryptos.

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There have been other developments in Israel too.

Bank Leumi, the country’s largest bank, started providing BTC and ETH trading and custodial services for institutional clients earlier this year, and just recently a centralised cryptocurrency exchange – Bits of Gold – received the first capital markets license from the regulator.

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Every time we see announcements like this, we know that they are driven by customer demand which is growing by the day.

Every time we see announcements like this, we know that the key demands from institutional clients – transparency in pricing, ease of execution, and critically, custodial services – are being increasingly satisfied.

Demand begets access begets demand. This is what a virtuous circle looks like.

Curious Cryptos’ Commentary – AI trading bots

There are many AI trading bots out there. No doubt some are genuine, no doubt some are outright scams, but I feel quietly confident that 100% of them fail to live up to their claims.

The sceptic in me believes that if someone has invented an AI trading bot that gives guaranteed outsized returns, then there would be no incentive to share that trading functionality with anyone else. That person would simply sit back, leverage up their assets as much as possible, and become very wealthy without anyone else knowing.

If that is true, then it follows that all the AI trading bots that are advertised to the public are only making money in the long-term for the person selling that service.

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I have always felt a little queasy about the operating principle of trading bots – that you allow a 3rd party bit of code access to your centralised cryptocurrency exchange accounts to trade on your behalf.

Now I learn that queasiness is justified.

Four users of the 3Commas AI trading bot have lost up to $6mm equivalent of cryptos after falling prey to a phishing attack.

This attack took the form of fake websites mocked up to look like 3Commas’ own site. The attackers sourced the API keys through these fake websites and drained the associated exchange accounts.

This attack took place outside of the 3Commas’ trading environment, but I must ask a simple question.

The four users lost on average $1.5mm each. Who is naïve enough to keep that much crypto in one centralised account, and then let 3rd party software have access to it?