Cryptocurrencies have had a rough last month with the overall crypto market cap tumbling by almost 50% from the all time high of $832 Billion to a 30 day low of $432 Billion on 17 Jan. This major crash was credited to all the FUDs that were circulated beginning with the story of shutdown of South Korean Exchanges, which was later disproved in an official statement by the authorities. Many other controversies and FUDs followed this, but just when the crypto market was on a rebound, a new story broke out in the mainstream media claiming that Tether, which is pegged to the US Dollar at a ratio of 1:1 , could potentially crash Bitcoin by about 80%.
First of all, no analysis or calculations were given to prove on how they arrived at the figure of 80%, all that they used to support their story was the recent Bitcoin crash of 50% and nothing else, however it seems that this story combined with the news that Bitfinex CEO had fired the auditor looking into Tether, was enough of a proof for weak hands to panic sell. This caused a decline in the Bitcoin prices and weakened the crypto rebound. Bitfinex however has released a statement in which they have said that each Tether in circulation has a US dollar in their bank account backing it. This FUD began when a person with username Bitfinexed on many platforms started to allegedly expose Bitfinex and Tether for fraud.
Here's My View
The person with the username Bitfinexed has been going against Bitfinex and Tether for a long time and he had pointed that Tether might not be pegged 1:1 to US Dollar and that it might be artificially inflating prices. This story was broken long time ago, even before the start of Bitcoin's bull run from $5k to around $20k, and no attention was paid to this. However, now that cryptos had taken a beating and were rebounding, mainstream media outlets had to create new FUDs to keep them down and initiate panic sells. You have to keep in mind that negative coverage gets their websites much more views and revenue than something positive.
Coming to the technical aspect, Tether has a market cap just around $2.5B and trading volume of about $2.2B, and if it was proved that Tether is indeed a scam and that it isn't backed by anything, then that would cause a decline of no more than 5% in BTC price even after you account for the panic selling, a decline that the market would easily recover from. In the past couple of years BTC has gone relatively more mainstream, in the sense that it is now available in many countries to trade directly against Fiat. This has diminished Tether's influence. Also most of the trades happen from crypto to crypto and no Tether is involved. People who hold BTC won't sell it just because an alternate currency failed, unless of course you're easily swayed by news stories that aim to create FUDs.
This news story run by the mainstream media, in particular, shows how strongly they are trying to keep the crypto market down and are using their position and reach to manipulate it. My advice to all the BTC hodlers is that never sell because of these FUDs, sell only when Bitcoin itself stops working, which will never happen.