**AI-Powered Trading Bots: Hype, Realities, and Risks in Crypto Markets**
AI-powered trading bots are rapidly gaining attention across crypto markets, sparking both excitement and unease among traders eager to automate their strategies. However, industry experts caution that many still misunderstand what these bots can—and cannot—do, and why specialized trading AIs behave very differently from general-purpose tools like ChatGPT.
This week’s episode of *Byte-Sized Insight* dives into the rise of AI trading tools, the hype surrounding them, and the risks investors should consider before entrusting automated systems with their capital.
### Beating the Market: Insights from Industry Experts
Brett Singer, Sales and Research Lead at Glassnode, and Nodari Kolmakhidze, Chief Financial Officer and Partner at Cindicator (creators of Stoic.AI), are two professionals deeply involved with the data, algorithms, and traders shaping the next generation of AI-driven strategies.
Singer explains that the real power of AI in trading isn’t in magical decision-making; rather, it lies in data processing.
> “People create these models that can explore an entire database within a day or two and be able to develop and create these trading strategies.”
He also noted that Glassnode’s new Claude-powered MCP server has made advanced analytics far more accessible:
> “It can pull directly from our database and be able to answer really complex questions within minutes and seconds.”
**Related:** [OpenAI unveils ChatGPT ‘Pulse’ – Could it help you trade crypto?]
Despite the promise, Singer cautions that most AI bots still fall short under realistic market conditions.
> “In the most part, they did not beat the market,” he said, highlighting that many rely on shallow backtests or single-signal strategies that lack the robustness used by professional quant desks.
### Generic vs. Specialized AI in Trading
Beating the market may not be achievable with general-purpose AI models like the wildly popular ChatGPT. Instead, success is more likely with highly specialized bots engineered specifically for trading tasks.
Kolmakhidze draws a clear distinction between chatbots and market-focused AI models:
> “There’s a big difference between specialized training models and general purposes,” he explained, arguing that expecting a chatbot trained on text alone to execute profitable strategies is unrealistic.
Trading, he emphasized, is notoriously difficult—even for top hedge funds.
Kolmakhidze also warned against the misconception that AI bots function as automatic profit machines:
> “The biggest misconception is that AI bot is like a money printer. It’s not like that.”
Market regimes shift constantly, and even strong models can quickly break down when volatility or momentum structures change.
> “They are good at predicting the past but not the future,” he said, stressing the need for careful oversight and long-term evaluation.
### The Future: AI Enhancing Traders, Not Replacing Them
Both experts agree that the future of trading isn’t AI replacing human traders; instead, it’s AI enhancing their capabilities.
As Singer puts it:
> “Today’s AI functions more like an associate or an intern that can work 24 hours a day but still requires human judgment.”
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Listen to the full episode of *Byte-Sized Insight* for the complete interview on [Cointelegraph’s Podcasts page](https://cointelegraph.com/podcasts), Apple Podcasts, or Spotify.
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https://bitcoinethereumnews.com/tech/ai-trading-bots-are-trending-experts-break-down-how-it-works/