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Originally Posted by Lightspeed
Totally scrub-tier.
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You have a scrub-tier understanding. The present market cap of crypto in no way reflects how much fiat currency has been injected into it. The cap simply shows the current trading price of all coins. In a correction, the cap can shift downwards by billions in minute.
Copy-and-pasted example: hypothetical shitcoin has 1 million coins outstanding trading at 1 cent per coin so market cap is $10K. Then I buy 1 coin for $10, market cap immediately goes to $10 Million. In this example, a single trade representing 0.0001% of outstanding volume and representing a net flow of $10 just increased market cap by $9,990,000 (9900%) in an instant.
The actual amount of fiat in crypto is estimated in the low tens of billions. A large amount of that market liquidity is provided by Tether, which represents real dollars. If confidence in Tether/Bitfinex is lost it will create a panic selling environment which would likely drain the reserves of all major exchanges. It would also crash the price of all alts. Confidence in crypto would quite likely be lost for a long time.
Yup.