Great post, well balanced argument. Thank you.

The whole situation is a very interesting one, that has the potential to be a huge grey swan for the Crypto market. I would love to see some scenario analysis done on what would actually happen in the event of a failure at Bitfinex/Tether.

I would imagine that a large portion of those holding tether and altcoins on exchanges that utilize tether in place of fiat would move as fast as(if) possible off the exchange, and perhaps into other exchanges with a Fiat pairings. I.e. to a place where they can get out should the market plunge on such news. I would guess that Bitcoin and Ethereum would therefore see inflows on the two way exchanges...