Tether in Trouble as GENIUS Act Targets USDT- Is a Market Collapse Ahead?

The post Tether in Trouble as GENIUS Act Targets USDT- Is a Market Collapse Ahead? appeared first on Coinpedia Fintech News

While the crypto is waiting anxiously for the upcoming crypto bills to hit the space. One analyst is expecting blood on the Satoshi Street once the GENIUS Act becomes the law. In this context, crypto analyst Jacob King sounded the alarm over what he calls the “bloodiest event in Bitcoin’s modern history.”

His warning centers on the potential banning of Tether (USDT) following the expected passage of the GENIUS Act, which he claims could trigger a massive collapse across the crypto market.

Tether in the Crosshairs?

According to analysts, the GENIUS Act, which is gaining traction in Congress, could effectively lead to a ban on Tether, the largest stablecoin by market cap. Despite the ban fear, Tether has recently minted 160 billion USDT, marking a major milestone and reinforcing its dominance in the stablecoin market.

He argues that this threat is why Tether has been “desperately printing USDT out of thin air” in recent weeks to artificially inflate crypto prices, including Bitcoin’s. Tether has long faced criticism for its lack of transparency and allegations of unbacked printing, though it has continued to deny wrongdoing.

Institutional Outflows Signal Trouble

King also points to a wave of record ETF outflows this week, stating that institutions are quietly exiting their Bitcoin positions. He sees this as a major red flag, suggesting that “whales are abandoning the sinking ship” while retail investors remain unaware of the looming risk.

Tether Insiders Dumping Bitcoin?

In a further claim, King says that Tether insiders are offloading record amounts of Bitcoin through OTC (over-the-counter) trades, distancing themselves from the fallout before it begins. If true, this could mean major players are shedding risk while keeping the market unaware of the scale of exits.

A Structural Collapse?

King’s core argument is that Tether is the foundation propping up Bitcoin. He estimates that 85–90% of BTC’s daily volume is dependent on USDT, which he calls “fake volume.” Without Tether, he warns, “people will realize how fake everything has been.” In his view, the crypto market is built on fragile ground, and the removal of Tether could expose the entire system to collapse.

While King’s post paints a bleak scenario, it’s important to note that his views are controversial and not supported by hard evidence in this thread. Still, his warning is sparking serious debate about stablecoin regulation and the real liquidity behind crypto markets, issues that could come into sharper focus as U.S. lawmakers push forward with crypto legislation.

How True is this?

While the warning highlights crypto’s volatility, it also opens the door for new players like Ripple’s RLUSD to gain ground. The GENIUS Act doesn’t ban Tether outright but gives it 18–36 months to comply. Contrary to panic, ETF data shows inflows, not outflows. Overall, the market remains shaky, but there’s no clear sign of an imminent “bloodbath.”