If an $18B stablecoin collapse (UST) caused a 30% BTC drop, a Tether collapse (with ~$160B market cap) should be much more devastating.
Not only it has much bigger market cap but has deeper integration into exchanges and DeFi infrastructure.
At the time, Bitcoin had a market cap of $590B, currently, it is $2.32T - so the percentage (3% vs. 6.9%) of Tether's market cap relative to Bitcoin's market cap is over twice as high.
I anticipate complete chaos when that occurs. Human sacrifice, dogs and cats living together... mass hysteria!
Sure, sure...
Explain to me how an altcoin would be the cause of bitcoin's collapse?
There's a certain amount of bitcoin on exchanges and the rest is in the hands of long time holders, or deposited on lost wallets. If someone holds USDT, and that coin somehow fails due to a centralized provider behind it going bankrupt or whatever, how does an average USDt holder influence the price of bitcoin? The quickest exit point would be to actually buy bitcoin and get rid of their USDt.
The BTC that the issuer of USDt holds would get frozen and later redistributed the way Mt.Gox bitcoin was.