Genuine question: whether or not Tether is fraudulent, how much can a currency with a market cap of ~$2B affect the greater ecosystem, or even just Bitcoin with a purported market cap of ~$150B? Obviously a scandal of this magnitude in a major cryptocurrency is bad for the whole environment for a host of reasons...but if Tether is really just a ~$2B fabricated cash injection, how much could it really prop up BTC?
It's hard to say because so much depends on investor psychology. But if they act to prop things up on the dips it looks like it just goes up and then other dumb speculators like me pile in.
Some academics studied manipulation at MtGox and "the paper demonstrates that the suspicious trading activity likely caused the unprecedented spike in the USD-BTC exchange rate in late 2013, when the rate jumped from around $150 to more than $1,000 in two months." Not sure how much actual cash was involved there but "bitcoins (BTC) valued at $188 million were fraudulently acquired."
