Once tether is gone I am sure bitcoin will flourish. Having cryptocurrency pegged to any standard only holds the space back, as so many investors only look at price over value.
However, tether will be approached with caution, as I am certain regulators do not wish to punish those unknowingly holding tether. Tether will probably continue to print as much as possible until they go down, even though it will eventually die it's value is being pegged to other cryptocurrencies when they are bought. It is such a complicated issue, and the only collateral a regulator could look to take would be other cryptos, since tether should be worth $0.
I also don't think this will have a larger affect on the crypto space. In many ways, what's done is done in the crypto space, in that there is no way a regulator could look to devalue other coins that have been propped up by tether. And even if bitfinex is completely taken down, this only lowers circulating supply and would help every crypto owner, other than those on bitfinex. The only affect any news has is speculation. If every single investor thinks it is the end of the world, it will be the end of the world. But I wouldn't be panicking in the first place.
Great stuff bobby