OK so Tether went from 83bn to 73bn... what's the big deal? It's not like LUNA.
If $10B was pulled out, that was into actual US dollars or equivalent, meaning they now have $70B backed up by $30B. If another $10B drains in the next week, it'll be $60B vs $20B. This incentivizes other holders of Tether to also pull out so they're not left holding the bag (= Tether's stash of dodgy loans etc), basically kicking off a slow-motion version of the same death spiral that we saw for UST/LUNA, until Tether runs out of assets and the whole crypto economy goes poof.
If USDT dies then BTC goes to like $500 on Binance. The cascade effects will cause runs on other exchanges, and then you're betting that they have enough reserves to cover a run. I'd want to be far away from the scene when that happens.
The fiat banking system is backstopped against this behavior by the FDIC, which guarantees your funds are safe even if the bank holding the funds goes under. This prevents customers from mass withdrawals in times of crisis. Crypto doesn't have anything like that, therefore it's going to look like the bad ol' days of 19th Century financial panics when a run occurs.
Do you just mean that confidence will be so low that people will try to shun cryptocurrencies and dump their positions, or are you talking about another mechanism?
If the USD -> USDT relationship breaks and "USDT dies", then what happens is the prices goes 1 USD = 0.05 USDT, which means that 30,000 USDT worth of BTC on Binance [1] is now worth just $1,500 USD.
[1] https://www.binance.com/en/trade/btc_USDT
* You can buy directly with a credit card, but that's likely settled off-chain with a banking relationship. If you want to use a direct bank transfer, you have to buy a stablecoin first on Binance.
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?
Now, would there be lots of manual intervention by exchanges to fix this as fast as possible, absolutely but that's the parents point.
It's not yet like Luna.
Just yesterday the Financial Times ran this story: "Binance promoted terraUSD as a 'safe' investment just weeks before the stablecoin and its counterpart luna collapsed in a $40bn wipeout that shook the crypto industry"[0]
[0] https://www.ft.com/content/d459f435-edff-412c-85a5-0961d50ab... / https://archive.ph/OQmjW