Yes but long term? The big question is not if there are real USD behind USDT or not but if Tether has a way to pump the entire crypto market. Basically: did Tether make BTC go to 64 K USD, by printing non-backer tether by the billions and then use them to buy BTCs?
Short term if USDT collapses, BTC would probably skyrocket due to everybody looking for an exit out how USDT. But long term? What if the BTC demand is simply mostly all fake?
You're talking about people who have already exited BTC - that's why they are holding USDT.
People flock to stables/fiat when uncertainty/risk increases, yes? So you have a bunch of people ($70b worth) who are currently in USDT. Then you have to account for all the people currently in crypto who would sell into stables/fiat in a black swan event.
What's the argument against this? You say that the argument is not well founded. Ok, fine. I've outlined my argument. What's the counter? What's the line of thinking where USDT holders en masse flock back into crypto when the safe haven that they already wanted to be in implodes?
They also may cash out to another fiat currency, no? I also am not sure I agree that they would all even cash out to fiat. I was asking what are the guarantees that they would cash out to USD, considering that why they may be holding USDT in the first place is to avoid US regulation? Something else to consider is that Tether is also more popular outside of the US. I'm just saying that I think it's an assumption that they all would cash out. It likely depends on how crypto as a whole is doing at that point, and I also think it's an assumption that crypto won't survive Tether's crash. There may be short term drops which lead to these assumptions being true, but really, no one knows for sure.
Especially on short notice, with Tethers sitting on an exchange that may not have access to fiat, they will likely sell to BTC or ETH at least at first.
Short term if USDT collapses, BTC would probably skyrocket due to everybody looking for an exit out how USDT. But long term? What if the BTC demand is simply mostly all fake?