[imaginenore]

I used to think like that too, but I've slowly changed my opinion.

First major error in your thinking is comparing market cap with daily trading volume. Volume is mostly coins moving back and forth, it kind of evens out, though at the moment there's a slight bias towards buying. If you decide to just sell $48B of Tether, there will not be enough buyers to hold the price near $1. Not even $1B. The liquidity is just not there, look at the books, the market depth.

So once we establish that, it's quite clear what the danger is. Imagine that Tether doesn't store its capital in dollars, but instead it buys BTC (for simplicity's sake, just one coin). So they drive the price of BTC up, and many people see it, and buy it too, and everyone is seemingly making money and getting rich, including Tether, because they think they are smart by not holding USD in their reserves, they make insane profits. But what happens when the party is over? What happens when the price starts dropping fast? Now, Tether financiers are probably not stupid, they probably have all kinds of stop-loss triggers in place. So when the price of BTC does down below X, they sell N% of their BTC reserves back into USD. And when it goes even lower below Z, they sell even more of their reserves, and so on. And so do many people who bought BTC as an investment. And that drives BTC price down even faster. But, as we established in the paragraph above, there's not enough buyers to absorb all these billions of dollars worth of sells, because the books are much thinner than markets caps.

So what can happen in that case? The price of BTC drops to near zero and USDT too.

We don't actually know what Tether stores their reserves in. It's possible they are smart and didn't just buy BTC only, I really hope it's a wide variety of cryptocurrencies, fiat currencies, stocks, precious metals, real estate, rare art, etc.