i get the difference between market cap and hard currency, but if want to cash out all 2.5 bn worth of tether to usd/gbp or any other fiat, i will still have to sell 2.5 billion worth of some crypto, lets say bitcoin, higher market cap means less coins. A higher market cap can absorb 2.5 bn worth of tether failure was my point, of which some is genuine, let's say half. Yeah, if news comes out that is tether is printing air backed tokens, then the market will sell off badly.
tether is a deposit receipt. its almost like a bank LC. "give this guy a bitcoin for tether, he has got cash, i can confirm it." I don't see any "stable" coin as a useful product.