I left Israel almost a decade ago, so I can't speak for the current state of things regarding the local industry (except that I was surprised how many people in my personal network can't operate 100% remotely), but I can tell you that spending time on job application challenges is wasting time - not only yours, but your potential employers', too (I wrote an article about this ages ago, and it's sadly still relevant: https://therightstuff.medium.com/effective-technical-interviewing-with-github-773509af3501).

In the current global climate, if you want to find permanent employment you need a different approach - start building up a portfolio. Whether you do so for free by contributing to open-source projects that interest you, or for money (eg. Gitcoin), the more real-world impact you can show for yourself the easier it'll be to for you to get your foot in the door. My department has recently hired two developers, who were brought to our attention on the strength of their StackOverflow profiles alone!

Another strategy is to build your own product, game or service. We are currently at an incredible point in time when tools are available for developers at any level of expertise to enable us to capitalize on small projects built at our kitchen tables. I personally built a cloud-based solution over the course of the past year that's 100% serverless (so it incurs no overhead) and a mobile app using Expo, and when I began I was neither a cloud developer nor a mobile app developer!

I warmly recommend investing some time thinking about what really drives you - not how much money you'd like to make - and see if you can't find the tools to take you there. Whatever you choose to do, I suspect it will take you where you need to be :)