The data seems to contradict Bitfinex’s claim that the reason its users withdrew 135,000 Bitcoin (BTC) from the exchange was an arbitration opportunity that occurred after Black Thursday.
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135,000 BTC later
On Thursday, March 12, Bitfinex had 200,000 Bitcoin Profit in its possession; by May 25, this number had dropped to just 65,000 BTCs. This represents a 67% decrease in just two and a half months.
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The data contradicts Bitfinex’s explanation
In an interview with Cointelegraph, Bitfinex CTO Paolo Ardoino said that the factor driving this trend was the fact that after March 12, the price of BTC on the exchange was lower than on other exchanges, which presented an arbitrage opportunity for traders:
„For a period after March 12, the price of BTC at Bitfinex was lower than at other exchanges, so traders were buying BTC at Bitfinex and selling it elsewhere, we have seen the opposite trend for ETH, where Bitfinex has seen the entry of 1 million.
However, the hourly price data obtained by Cointelegraph seems to contradict Ardoino’s thesis, the price on most exchanges seems to be synchronized with practically no gap, meanwhile the Bitfinex balance fell by more than a billion dollars.
During the same period, Bitcoin’s balances on other exchanges decreased by 315,000 BTCs, Bitfinex’s share represents 43% of this decrease, and BitMex represents an additional 31%.
Bitcoin Post-Halving Report (Q2 2020) by Cointelegraph Markets Research
A constant arbitration opportunity is meaningless
While this coincides with the general trend of investors withdrawing their digital assets from exchanges, the fall in the Bitfinex balance is by far the worst.
The point of arbitrage is that price gaps are traded until they disappear, this leads to uniformity across all trading platforms, such constant arbitrage opportunities would be contrary to the way markets operate under normal conditions
Cointelegraph contacted Bitfinex for comments, but did not receive a response for publication.