Hey there! You can use USDT when making transactions if you can find arbitrage opportunities against with this pair like BTCUSDT on Bitfinex and Binance. Withdrawal fees from exchange should insignificant if you are doing arbitrage with a decent amount of funds. And the banks usually don't charge more than 15-25 USD per bank transfer so I'm assuming that you are using a small bankroll to perform arbitrage. As a rule arbitraging on high liquidity markets is mostly for the big dogs who have large quantity of asset "inventory" at their disposal.
I guess the issue here is that the guy isn't using a decent amount of funds.
Arbitrage generally means very small amounts being traded (due to lack of volume or order volume on arbitrage opportunities). So even if you find a 0.5% arbitrage, with a 50k satoshi withdrawal fee like on Binance, you need 0.1 BTC volume just to make up for it.
Like you said, arbitrage needs high liquidity, many accounts and big bankrolls. Not for the small fish for sure.
