The police didn't actually arrest him, and I think the headline is a little misleading. Falter had been walking directly against the protest (and not attempting to cross the road like he claimed). The police stopped him and offered to escort him to his destination via a route that avoided the march. Falter refused and tried to push through the police officers and cross the protest march. The officers prevented him and told him he was free to go in the opposite direction, or that they would escort him past the protest, but that if he tried to go the way he was they would have to arrest him. It was clear they didn't want to arrest him, and the officer offered probably a dozen times over the course of the ~15-minute interaction to escort him via a different route.
I think the officer did a good job of de-escalating, personally, and was incredibly patient in the face of Falter's obnoxious, disingenuous antagonism. It's a shame that there's a single soundbite that, when stripped of context, portrays the officer poorly, but I think it's clear to anyone watching the full video that the officer had no anti-semitic intent and handled the situation well.