But to your original comment, shouldn't BTC go to 500 USDT but stay at a constant USD price (assuming no contagion to the rest of the crypto market which I mentioned above)?
Basically if you buy BTC using USD going through a random currency RC (USD -> RC -> BTC), the exchange rates BTC:RC and USD:RC shouldn't matter as long as they're constant. If they become volatile, I'd expect exchanges to stop trading these pairs, making these rates undefined. But if Tether ends up being stable at say $0.1, I don't see why the BTC:USD rate (going through Tether) would change.
There are also other stablecoins, I'm assuming that USDT is not the only one in use, so why would it impact the BTC:USD rate (again, forgetting about the contagion)? E.g. on https://coinmarketcap.com/currencies/bitcoin/markets/ there are several pairs defined, some directly with USD, some with DAI.
Edit: maybe you mean that as long as they pretend the peg still holds, people would just buy BTC with USDT, making the run worse?
Basically if you buy BTC using USD going through a random currency RC (USD -> RC -> BTC), the exchange rates BTC:RC and USD:RC shouldn't matter as long as they're constant. If they become volatile, I'd expect exchanges to stop trading these pairs, making these rates undefined. But if Tether ends up being stable at say $0.1, I don't see why the BTC:USD rate (going through Tether) would change.
There are also other stablecoins, I'm assuming that USDT is not the only one in use, so why would it impact the BTC:USD rate (again, forgetting about the contagion)? E.g. on https://coinmarketcap.com/currencies/bitcoin/markets/ there are several pairs defined, some directly with USD, some with DAI.
Edit: maybe you mean that as long as they pretend the peg still holds, people would just buy BTC with USDT, making the run worse?