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The data seem to contradict Bifinex’s history of Bitcoin deposit decline

June 12, 2020

The data appears to contradict Bitfinex’s claim that the reason why its users withdrew 135,000 Bitcoin (BTC) from the exchange was an arbitrage opportunity that came after Black Thursday.

135,000 BTC later

On Thursday March 12th, Bitfinex owned 200,000 BTC, By May 25, that number had dropped to just 65,000 BTC. This corresponds to a decline of 67% in just two and a half months.

Bitfinex Bitcoin balance. Source: Glassnode

The data seem to contradict Bifinex’s history of Bitcoin deposit declineThe data seem to contradict Bifinex’s history of Bitcoin deposit decline

Bitfinex Bitcoin balance. Source: Glassnode

The data contradict Bitfinex’s declaration

In an interview with Cointelegraph, Paolo Ardoino, Chief Technology Officer (CTO) of Bitfinex said: Crucial to this trend was the fact that the BTC price on the exchange after March 12 was lower than on other exchanges, which was an arbitrage opportunity for traders.::

“In a period after March 12, the price of BTC on Bitfinex was lower than on other exchanges. Traders bought BTC on Bitfinex and sold it elsewhere. We have seen the opposite trend for ETH, where Bitfinex has entered 1 million seen ”.

Bitcoin price on the main stock exchanges (GDAX stands for Coinbase). Source: Nomics

Bitcoin price on the main stock exchanges (GDAX stands for Coinbase). Source: Nomics

However, the hourly price data obtained from Cointelegraph seem to contradict Ardoino’s thesis: The price on most exchanges appears to be practically without a gap, while Bitfinex’s balance has dropped by over a billion dollars.

Bitcoin balances on Bitfinex, BitMex and other exchanges. Source: Glassnode

Bitcoin balances on Bitfinex, BitMex and other exchanges. Source: Glassnode

During the same period, Bitcoin balances on other exchanges decreased by 315,000 BTC. Bitfinex’s share accounts for 43% of this decline, and BitMex accounts for another 31%. These two exchanges were responsible for almost 75% of the trend

A permanent arbitrage opportunity is pointless

Although this coincides with the general trend of investors pulling their digital assets off the stock markets, the decline 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 permanent arbitrage opportunities would contradict the functioning of the markets under normal conditions

Cointelegraph contacted Bitfinex for comment, but received no response to the publication.