I'm not an apologist by any means - I absolutely hate Tether, and cryptocurrencies - though for perspective, the most optimistic take is that if you exclude exchanges that are known for reporting fake volume, the breakdown is roughly 59% USD and 41% Tether. [1]
It will likely take the whole space down with it, not just Bitcoin, because what'll happen is on all USDT exchanges and insolvent USD exchanges, the price of crypto will reach millions of Tethers per coin as people try and flee, then on all real-dollar exchanges, the price will collapse to pennies as everyone tries to sell their crypto for actual people money that you can use to buy goods and services in the real world.
I think you underestimate demand massively. If bitcoin price ever starts to drop precipitously, it will be scooped up by a mass of buyers who have a ton of money to blow and a lot of interest in maintaining price. The only thing that could cause a real collapse to sub 4 digits is if something went wrong in the actual protocol or some unforeseen exploit occurred that affected the system in a way that was unrecoverable. If the cryptography and incentive systems continue to function, the price will probably never approach 4 digits again even if Tether blows up (which it probably will).
The logic here is that many people will buy a crashing asset because, if they all cooperate, they can keep the price up. That seems highly unlikely. You can't just will away a bad equilibrium or a collective action problem.
> The only thing that could cause a real collapse to sub 4 digits
Only thing? I agree that Tether’s collapse won’t be the end of Bitcoin. But if Tether collapses amid a real recession, i.e. one where incomes fall, that potential demand may not be able to act on its impulses. And note that Tether’s collapse and such a recession are correlated.
“Through Tether pass more or less 80% of bitcoin trades.”