Data appears to contradict Bitfinex's claim that the reason for its users withdrawing 135,000 Bitcoin (BTC) from the exchange was an arbitrage opportunity that ensued following Blackness Thursday.

135,000 BTC later on

On Thursday, March 12, Bitfinex was holding 200,000 BTC. By May 25, this number dwindled to only 65,000 BTC. This is a 67% decrease over the span of two and a one-half months.

Bitfinex Bitcoin Balance. Source: Glassnode

Bitfinex Bitcoin Residue. Source: Glassnode

Data contradicts Bitfinex's explanation

In a Cointelegraph interview, Bitfinex CTO Paolo Ardoino stated the driving factor behind this tendency was the fact that following March 12, BTC cost on the exchange was lower than on other exchanges, thus presenting an arbitrage opportunity for the traders:

"For a period following March 12th, the price of BTC on Bitfinex was lower than other exchanges, so traders were ownership BTC on Bitfinex and selling somewhere else. (Nosotros have seen the opposite tendency for ETH, where Bitfinex has seen an inflow of ane 1000000."

Bitcoin Price On Major Exchanges (GDAX denotes Coinbase). Source: Nomics

Bitcoin Price On Major Exchanges (GDAX denotes Coinbase). Source: Nomics

Yet, hourly price data obtained by Cointelegraph appears to contradict Ardoino's thesis. The cost beyond near exchanges appears to be synced with nearly null gaps. Meanwhile, Bitfinex's balance fell by over $one billion.

Bitcoin Balances Bitfinex, BitMex & Other Exchanges. Source: Glassnode

Bitcoin Balances Bitfinex, BitMex & Other Exchanges. Source: Glassnode

During the same time period, Bitcoin balances across other exchanges shrank by 315,000 BTC. Bitfinex's share represents 43 percent of this decrease, and BitMex represents a further 31%. These two exchanges were responsible for well-nigh 75% of the trend.

Consequent arbitrage opportunity makes no sense

Although this coincides with the overall trend of investors withdrawing their digital assets from exchanges, the fall in Bitfinex's balance is past far the worst.

The point of arbitrage is that price gaps are traded abroad. This leads to uniformity across trading platforms. Such consistent arbitrage opportunities would exist contrary to the manner markets operate under normal atmospheric condition.

In an April 24 statement to Cointelegraph, Bitfinex said that a serial of over-the-counter (OTC) deals could be responsible for the withdrawals:

"We did have a series of rather big OTC deals, where the coins were taken off the platform and that led to the reductions of coins held in our cold wallet. We act as an exchange and nosotros can also act every bit a party to OTC deals."

To that effect, Paolo said, "Bitfinex's OTC desk deploys the same security protections, custody, and KYC as the substitution. Clients include institutions, traders and miners. Exchange and OTC liquidity and pricing are among the factors affecting volumes."