Why would Tether's collapse be bad for cryptocurrencies?

Early or late Tether face collapsing.

The total amount of fiat/paper currency collected by Tether in exchange for USDT and all the other ‘stable’ coin issuers is a small fraction of the total market cap of all crypto-currencies.

When faced with multiple cash-out demands - for ex. selling bitcoins, getting USDT and then attempting to get fiat/paper currency Tether has either to break the 1:1 peg or bring down the entire crypto-market.

More on the danger in the ‘stable’ coins -
The danger in the stable coins (thought experiments and the real price of Bitcoin)

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