Leverage sent it up on the way up, now leverage knocks it down as it unwinds
If it gets so bad that Tether crumbles then expect an astonishing collapse. Tether’s money printing caused both recent crypto bubbles. They’re the crypto money printer
Money is an IOU (it also ends up having other uses, but fundamentally that’s what it is). That’s fundamentally all it is. And it’s also a unit. It’s a technology that allows me to determine that if 5 chickens are worth 1 sheep, and 3 sheep are worth 1 cow, then 1 cow is worth 15 chickens, without ever having to spend a second to do any math. This is essential in a complex economy where there may be millions if not billions such conversions.
Money that is useful for the purpose of smoothening the running of an economy has a few properties.
1) It’s value stays fairly stable. This means that people are confident spending money and receiving money that the value they agreed upon now will basically be the value tomorrow, so they don’t have to do additional work to figure out when they should make the transaction for optimal value (and since the optimal time is the opposite for both parties, it’s very difficult to find such a time and it always results in a win-lose situation).
2) It’s slightly inflationary. Money sitting under a mattress represents work that could be done that isn’t. This is a real waste of human output, because time is limited. So you want a slightly inflationary money to encourage spending and investment.
3) Money supply reflects the productive capacity of the economy. If the capacity of the economy grows, either due to more workers, or due to better productivity, the money supply needs to grow. Otherwise there will not be enough dollars to enable work to be done and we will waste human time and output simply because we don’t have enough of the means of exchange.
All of this is a difficult balance to strike, which is why you need people controlling the flow of money. We may eventually come up with algorithms that could measure a variety of real world inputs, such as the prices of goods, working population, productivity, etc. that can do that without human input, but it’s not possible yet because we don’t know the economic rules of how things work, so it becomes a matter of almost trial and error guided by some basic economic rules.
Savings are necessary for a rainy day. Without adequate savings, you are one natural (or man-made) disaster away from starving. It is absolutely not a "waste of human output," to keep some aside, but is being responsible for oneself. Saving is not possible under high inflation, as the savings lose purchasing power too rapidly. Someone who wishes to save is forced to make risky investments just to maintain the purchasing power of what they previously laboured for.
Thus, the issue is solved via currency reserve requirements. Crypto on the other hand can’t solve the problem because they can’t set laws so anyone can set up a Bank using on chain wallet(s) and then issue loans and offer interest on deposits etc.